Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

LETCHWORTH GARDEN CITY CORPORATION BILL

Order for committal [20th March] read and discharged:

Bill committed to a Select Committee of Nine Members, Five to be nominated by the House and Four by the Committee of Selection:

Promoters of the Bill to bear liberty to be heard in favour of the Bill by themselves, their Counsel, or Agents:

All Petitions against the Bill to be referred to the Committee and such of the Petitioners as pray to be heard by themselves, their Counsel or Agents, to be heard against the Bill, if they think fit:

Power to send for persons, papers and records:

Five to be the Quorum.—[The Chairman of Ways and Means.]

Oral Answers to Questions — ROADS

Bus Stop, Whitehall

Mr. Hector Hughes: asked the Minister of Transport if he is aware of the danger to the public caused by the change in the stopping place of buses numbers 11, 24, 39 and 134 from the end of Whitehall to a place near the Cenotaph, Scotland Yard and Richmond Mews and if he will take steps to have the stop restored to its former stand.

The Minister of Transport (Mr. Ernest Marples): If the hon. and learned Member will let me know why he thinks the change dangerous I will ask the Metropolitan Traffic Commissioner to look into the matter.

Mr. Hughes: I will let the right hon. Gentleman know by way of a supplementary question. Does he realise that, grouped together just there, are twenty-two bus stops within a few hundred yards of each other, collecting crowds and thereby creating a danger to the public; that many of the bus stops are in the dangerously narrow neck between the Cenotaph, Grindlay's Bank and Scotland Yard, and that there is ample space for the Minister to find a comprehensive bus stop which would not be a danger to the public —[Interruption.] —but would serve the public very much better than the present bad arrangements? I say that notwithstanding the rude interruptions of hon. Members opposite.

Mr. Marples: I will look carefully at the supplementary question which the hon. and learned Member has asked. I hope that he is not injured between Grindlay's Bank and Scotland Yard.

Oxford Street

Sir W. Wakefield: asked the Minister of Transport what proposals, alternative to the introduction of one-way traffic in Oxford Street and neighbouring streets, he has received for the relief of the traffic congestion in Oxford Street and its vicinity.

Mr. Marples: I have received various suggestions for reducing crossing and turning traffic, for confining Oxford Street to buses and other heavy vehicles and for prescribing other routes for through traffic. I am considering these suggestions as well as the detailed implications of one-way working. I hope to make a further announcement shortly.

Sir W. Wakefield: I thank my right hon. Friend for that reply. Can he give any indication when he will be able to give a firm answer? He will appreciate that considerable anxiety has been aroused because of the uncertainty about any proposals that may be made, and that the sooner he can make a statement the better it will be.

Mr. Marples: I quite agree with my hon. Friend, but this is an important scheme, and it would be wrong to decide it too hastily. A substantial number of comments and alternative suggestions have been made, and I am


examining them with great care. I would remind my hon. Friend that every traffic scheme which is announced arouses opposition. For that reason we always have a six months' experiment. If it fails we are quite prepared to revert to the former situation.

A.38 Road, Lulsgate-Potters Hill

Mr. Webster: asked the Minister of Transport how many accidents involving motor cars have occurred between the airport entrance at Lulsgate and Potters Hill on the A.38 during the last convenient period.

Mr. Marples: In 1961 there were six personal injury accidents involving motor cars. In these accidents one person was killed, two seriously injured and six slightly injured.

Mr. Webster: Is my right hon. Friend aware that this is a particularly dangerous stretch of road for motorists as well as for pedestrians? Is he aware that, going north, there is a dip at the end of a long straight stretch of road, followed by a sharp right-hand bend, and that any notices which may be put up to this effect would be obscured and confusion caused by the many notices along the airport road requesting motorists not to park by the kerb?

Mr. Marples: In view of that supplementary question, I will look at the point raised by my hon. Friend to see whether we can do anything about it.

Mr. Webster: asked the Minister of Transport what safety measures he proposes to take to safeguard children and other pedestrians between Lulsgate Airport and Potters Hill on the A.38 following his discussions with the Somerset County Council.

Mr. Marples: I would refer my hon. Friend to the Answer given on 4th April to my hon. Friend the Member for Somerset, North (Mr. Leather).

Mr. Webster: May I express the gratitude and relief which will be felt by parents who have children attending this school? May I ask my right hon. Friend when it is proposed that this bridge shall be started?

Mr. Marples: One cannot say that because what we have done is to ask the Somerset County Council, as agents of

the Ministry, to prepare it as quickly as possible. That the council proposes to do and we shall bear the cost of the footbridge, which we intend to put up, and I do not think we can go faster than that.

London-Cheltenham (Motorway)

Mr. Ridley: asked the Minister of Transport whether he will build a motorway from London to Cheltenham.

Mr. Marples: No, Sir. When the London-South Wales Motorway is completed, it will relieve A.40 of much of the through traffic to South Wales, particularly heavy goods traffic. In addition, many improvements, including the High Wycombe By-pass, are planned for A.40 itself.

Mr. Ridley: Is my right hon. Friend aware that, apart from closing every branch line in my constituency, he has closed one of the lines from London to Cheltenham and so increased the problems confronting people in the West Country who wish to get to London? Is he aware that, although I support his policy, I should like him to try to improve the road communications between this important centre and London?

Mr. Marples: That is exactly what we are doing. We have this great motorway which will go to South Wales and take the main burden of the traffic now going along the A.40.

Mr. Manuel: Is the Minister aware that his present transport policy is denuding certain rural areas of any transport facilities? Does not he agree that it is easy enough to say that small bus concerns can run alternative services if the railways are closed, but that these services will not be run if they are uneconomic, and that is the problem?

Mr. Speaker: Order. The object of a supplementary question is to elucidate an answer. The answer to this Question relates to a motorway from London to Cheltenham.

Mr. Manuel: Am I correct in thinking that my supplementary question was addressed to Question No. 10?

Mr. Speaker: No. It is Question No. 9. That is probably how the error arose.

Stone-Leek Road (Cellarhead Crossroads)

Mr. Harold Davies: asked the Minister of Transport if he is aware of the accidents that have taken place at the Cellarhead crossroads on the main Stone to Leek road, Staffordshire; and whether he will now order traffic lights to be placed there.

Mr. Marples: Since 1st January, 1960, there have been two accidents involving personal injury at this cross roads. The most recent would not have been prevented by traffic signals and I am not satisfied that signals would be appropriate in the conditions obtaining there.

Mr. Davies: Is the Minister aware that during three Parliaments we have had that kind of Answer from Ministers of Transport? Is he aware that those who use this road —I use it scores of times in a year —know that the bonnet of a car is beyond the "Halt" sign before one can see the approach road? Is the Minister prepared to publish the report of the divisional road engineer on the matter? Is he aware that local opinion considers that traffic lights are essential, and would he please look at the matter again and do something —because damn-all has been done up to now?

Mr. Marples: The hon. Gentleman does not realise the controversial value of under-statement. The record of accidents for approximately two-and-a-quarter years is less than half the accident rate for signal-controlled junctions. One of these accidents in which a truck was involved was due to the failure of its brakes and therefore, even had there been signals, whether the lights were at red, amber or green the vehicle would still have gone on.

Mrs. Slater: Does the Minister know that these were two very serious accidents and that numerous accidents take place at this corner which is a very bad corner on a very much used road? Will he look into this and not just take the word of the divisional road engineer, who gives very bad advice about some crossroads?

Mr. Marples: I cannot accept that. A great number of accidents take place at crossroads, but the average in this case is less than half the national average at controlled junctions.

Mr. Davies: Is the Minister aware that many accidents which happen there are not reported because, fortunately, they are not of major seriousness, but accidents do happen without the Minister and his officials hearing of them? This is really serious.

Mr. Marples: I presume that that happens elsewhere as well.

Parking Meters, Metropolitan Area

Sir B. Janner: asked the Minister of Transport if he will take steps to publicise to motorists in the Metropolitan area that some of the new green parking meters are for five hours with a minimum charge of 2s. 6d., while others are for a maximum period of four hours, but that any proportion of the time can be used at the rate of 6d. per hour, in view of the fact that this lack of conformity, and the lack of publicity before the meters are put into use, are causing motorists inconvenience and expenses in fines.

Mr. Marples: It is not in fact possible to park at a four or five-hour meter for 6d. Some green parking meters give five hours for 2s. 6d. only. Others give four hours for 2s. with an alternative of two hours for 1. Details of the periods and charges are all on the meters. Publicity was given at each stage when long-term meters were introduced, and details of periods and charges are on every meter. I am considering what more can be done to make the situation clear to motorists.

Sir B. Janner: While I am obliged to the Minister for the last few words of his Answer —I was fully aware that it was not 6d. an hour and wanted to suggest in the Question a change to 1s. —does he appreciate that, owing to the variety of shapes and sizes of parking meters, people do not know what is happening? Is he aware that people are putting 6d. or 1s. into a meter, thinking the meter is out of order when it does not register and going away and then returning to find that they have tickets for fines when that ought not to happen?

Sir G. Nicholson: Press button B.

Sir B. Janner: The hon. Member may have experience in other directions, but


that is another question. Will the Minister take immediate steps to put this matter right, because people are put to considerable difficulty and are fined because of lack of knowledge and because they cannot be expected to read every meter?

Mr. Marples: The information is on the meter for the motorists who take the trouble to read the instructions. If the hon. Member knows of any case in which he thinks injustice has been done I should be grateful to have a letter from him about it.

Mr. Dudley Williams: Does not my right hon. Friend feel that if people are not able to read what is on a meter they are not competent to drive motor cars?

Mr. Marples: A lot of people can read, a lot of people refuse to read, and some cannot read at all.

Road Improvements, Cornwall

Mr. Scott-Hopkins: asked the Minister of Transport what progress is being made with the improvements undertaken last year to deal with increasing traffic congestion during the summer months on trunk roads in and leading into Cornwall.

Mr. Marples: Work has started on the widening of Barnstaple and Wadebridge bridges.
In addition nineteen trunk road improvement schemes in Cornwall and its approaches were committed in the last financial year. Together these nineteen schemes will cost some £290,000. Work on nearly all of them will have been completed in time for the summer traffic peak.

Mr. Scott-Hopkins: Is my right hon. Friend aware that that is fine as regards the trunk roads, but he has recently reduced the classified roads programme in Cornwall with the result that, although the trunk road congestion will not be too bad, on the unclassified roads it will be increasingly worse during the summer months?

Mr. Marples: I am afraid that I cannot agree with my hon. Friend's supplementary question, even though it grieves me not to agree with him.

M.1 (Anti-dazzle Screen)

Mr. E. Johnson: asked the Minister of Transport what further evidence he has received from the Road Research Laboratory in regard to the value of the anti-dazzle screen on the M.1 motorway; and when he expects to reach a conclusion about the desirability of erecting the screen for the full length of the M.1 and on other motorways.

Mr. Marples: The Road Research Laboratory is continuing its studies. I should want conclusive evidence that the advantages outweigh the disadvantages before continuing the screen as suggested or installing screens on other motorways.

Mr. Johnson: May I ask my right hon. Friend if it is not the case that the screen has now been erected for over two years, and if it be true that the mills of God grind slowly, is (he aware that they would give the Road Research Laboratory 21 lb. and a beating on this matter?

Mr. Marples: I would remind my hon. Friend that the Road Research Laboratory comes under my right hon. and noble Friend the Minister for Science.

Mr. Edelman: Is the right hon. Gentleman aware that on this otherwise excellent road there is inadequate accident control and that many of the accidents which have taken place especially in bad weather where screens of this kind might have been useful have been further aggravated, particularly during mist and fog, because of the absence of prior warnings?

Mr. Marples: I am not aware of that. Personally I should have thought that any driver who drives in fog or in wet weather would go slower and that it does not need a warning to tell him to do so.

Mr. Hocking: Will the right hon. Gentleman give consideration to putting this anti-dazzle screen at a distance of at least 100 yards on either side of the bridges on the M.1? This is a most dangerous part of the road because oncoming headlights cause a shadow to be cast on the road on either side of the bridge. Therefore, it is very dangerous. Would he give consideration to a screen being provided there?

Mr. Marples: I will consider that—it is a good point. This particular experimental section of the road was on a curve and on a hill where there is a dip as well.

Mr. Jennings: Will the Minister give consideration to the planting now of effective shrubbery as a cushion against such accidents?

Mr. Marples: We started to give consideration to that about six months ago, and I hope shortly to be able to make an announcement.

Mr. E. Johnson: asked the Minister of Transport how many cases have occurred of motor vehicles hitting the anti-dazzle screen on the M.1 motorway; in how many of these cases the vehicle has been effectively stopped between the two carriageways, gone through the screen on the opposite carriageway, or rebounded on to the carriageway along which it had been travelling; and how often a vehicle hitting the screen has collided with another vehicle as a consequence.

Mr. Marples: Up to 20th March, 1962, there were reports of twenty cases. Nine stopped between the carriageways; eight went through the screen on to the opposite carriageway; three rebounded onto their own carriageway. There were two collisions with other vehicles, one of which involved a vehicle travelling on the opposite carriageway.

A.5 Road (Service Road, Grendon)

Mr. Matthews: asked the Minister of Transport whether he has considered a scheme to share the cost of a service road on the south side of the A.5 trunk road at Grendon with the householders concerned.

Mr. Marples: My Department has no financial responsibility for the construction of this service road; the question of sharing the cost with the householders does not therefore arise.

Mr. Matthews: Is my right hon. Friend aware that this particular service road is likely to be a considerable source of danger when the new trunk road is developed and that, owing to rather special legal difficulties, the agreements with the frontagers are not enforceable because of delay in the road works in

the early years after the war? Does my right hon. Friend agree that there seems to be some case for a little financial assistance being given to the frontagers?

Mr. Marples: I sympathise with my hon. Friend, but when these houses were built the frontagers knew from the beginning that they would have to bear the cost of constructing the service road. Most of the plots involved have conditions to this effect attached to every planning consent originally given. Therefore, I do not think that the Exchequer can take that burden from them.

M.1 (Shrubs and Trees)

Sir B. Janner: asked the Minister of Transport, in view of the importance of the extension of planting of shrubs or trees in the division between the two roads on the M.1 in order to prevent the type of accident which recently occurred, when he now intends that this planting shall be carried out.

Mr. Marples: I doubt whether the planting of shrubs or trees in the central reserve of M.1 would necessarily reduce the number and severity of accidents, although it may be useful for other purposes. We are, however, considering whether any other steps should be taken to prevent vehicles crossing the central reserve.

Sir B. Janner: Is the Minister aware that that is a very alarming reply? Is he aware that in America and Holland shrubs have been planted and that the hedges which arise prevent very serious accidents? Cars can be stopped within a few yards, even though they are travelling at a very fast pace? Is he not prepared in these circumstances to save life and limb, and incidentally prevent dazzle, but ensuring that shrubs are planted straight away? Will he investigate the matter?

Mr. Marples: I have already investigated it and I have asked the Americans for details of their experience. The American experience of central safety fences indicates that these might cause more accidents than they prevent, due to vehicles colliding with the fence.

Mr. Gresham Cooke: Although safety fences may have their defects, is my right hon. Friend aware that the rambler


rose bushes in America have been extremely successful and have been planted free of charge in many places by nurserymen who are glad to have the prestige from doing so?

Mr. Marples: Yes. That is why I said in answer to an earlier supplementary question that we were inquiring into the question of what could be placed in the central reservation.

Mr. Dance: Will not my right hon. Friend reconsider the decision he gave when I asked him a supplementary question some time ago about continuing this anti-dazzle screen along the M.1? I can assure him that all users of the road have found great—

Mr. Speaker: Order. We have dealt with screens. I think that the hon. Gentleman was not here then. This Question is about shrubs and trees.

Sir B. Janner: Is the Minister prepared to go further into this matter without delay? As the planting of shrubs and trees has proved very succesful in some parts, as has already been confirmed by the hon. Member for Twickenham (Mr. Gresham Cooke), does he not think that he should start on this job straight away so that within two or three years accidents will be prevented?

Mr. Marples: I will consider any evidence the hon. Gentleman cares to give me which he has from America or elsewhere. I give him my word that I will look at it closely.

Liphook-Petersfield (By-pass)

Mr. Gough: asked the Minister of Transport when he expects to build a by-pass on the A.3 between Liphook and Petersfield.

Mr. Marples: As I said in answer to my hon. Friend on 28th March, this is a long-term project. I cannot give any indication of date.

Mr. Gough: Does my right hon. Friend agree that this stretch of road contains practically every known hazard that a public highway can contain, including a particularly dangerous hairpin bend under a railway bridge on a very narrow road, and several dips that are completely blind? If it is impossible to make a by-pass, will my right hon.

Friend give the assurance that a further survey will be made in the very near future to try to eliminate these very grave dangers?

Mr. Marples: I cannot agree with my hon. Friend. The Hampshire Development Plan does not give the degree of urgency to this that he attaches to it.

Peterlee and Easington

Mr. Shinwell: asked the Minister of Transport what schemes he has in contemplation for road development in South-East Durham to enable improved transport facilities to be brought into the area covered by the new town of Peterlee and the Easington Rural District Council.

Mr. Marples: Peterlee and Easington will benefit from several of the road improvements planned for County Durham. In particular, the A. 19 is being improved by stages throughout the county. The widening of a 5-mile length of this road a few miles south of Peterlee, and the provision of a roundabout at a difficult road junction in Easington Village, are included in my trunk roads programme.

Mr. Shinwell: Because of the importance of such development to this area, may I, before the Minister makes a decision, have a talk with him?

Mr. Marples: I am always delighted to have a talk with the right hon. Gentleman.

Motorways

Mr. Pargiter: asked the Minister of Transport if he will give particulars of his proposals for a supplementary motorway network, in addition to that already announced.

Mr. Marples: I have already announced a firm programme for the next five years. Surveys are in hand for schemes to follow that programme. I am not prepared at this stage to commit myself to announcing details of projects in our longer-term studies.

Mr. Pargiter: Is the Minister aware that the earliest possible intimation should be given about future projects, particularly to local authorities, in order that their own road programmes can be fitted to suit the schemes the right hon. Gentleman might have in mind?

Mr. Marples: I am certainly aware of that. That is why, during the last two years, we have had a complete change in our programme, and have announced it to the local authorities as far ahead as we can. Of course, the present target of the road programme is the completion of a motorway network of about 1,000 miles in England and Wales by the 'seventies, which will be of great advantage.

Mr. P. Browne: When considering this long-term programme, will my right hon. Friend reconsider the remark he made a moment ago that Devon and Cornwall had got their fair share? On Wednesday, 21st June, he told me, in answer to a Parliamentary Question, that he intended to give priority to urban schemes. Surely, therefore, that means that Devon and Cornwall have not had their fair share.

Mr. Marples: I did not say an equal share; I said a fair share.

Classified Road Schemes

Sir W. Wakefield: asked the Minister of Transport whether, in view of his recent statement regarding trunk road schemes which he hopes to authorise up to five years ahead, he will extend the period for announcing classified schemes under the rolling programme to five years also.

Mr. Marples: Experience so far has shown that, in general, a three-year programme of classified roads is as much as it is desirable or feasible to arrange. But I will certainly be prepared to consider my hon. Friend's suggestion.

Sir W. Wakefield: Is my right hon. Friend aware that I am very grateful indeed for that Answer? I hope that he will be in a position to give a decision at a fairly early date.

Mr. Marples: Yes, but I would warn my hon. Friend that the procedure for trunk roads is longer than that for classified roads. But I shall certainly bear his suggestion in mind.

Eastern By-pass, Cardiff

Mr. G. Thomas: asked the Minister of Transport what reply he has sent to the Cardiff City Council concerning its representations for a speeding up of

preparations for an eastern by-pass road in Cardiff.

Mr. Marples: I am considering these representations, but would refer the hon. Member to the Answer given on 4th April to my hon. Friend the Member for Cardiff, North (Mr. Box) and to the hon. Member for Cardiff, South-East (Mr. Callaghan).

Mr. Thomas: Is the Minister aware that everyone responsible for traffic in Cardiff is deeply disturbed by his attitude? Is he further aware that the life of Cardiff is being absolutely throttled by road traffic, and that the construction of this eastern orbital bypass at the earliest moment is essential? Will he look at this again?

Mr. Marples: That may be the view of Cardiff, but many other parts of Wales—although the hon. Gentleman may not believe it—consider their schemes to be more important than this one.

Mr. Box: Is my right hon. Friend aware that his decision not to include the inner by-pass in his five-year plan is already holding up the development of the central area of Cardiff? Cannot he look at this matter again, and see whether it is possible to include this by-pass?

Mr. Marples: I shall certainly look again at the proposal but, quite frankly, I do not think that it will be possible to include it without excluding something else in Wales.

Cowbridge Road, Cardiff

Mr. G. Thomas: asked the Minister of Transport what recent communication he has received from the Cardiff City Council concerning road safety provisions in Cowbridge Road, Cardiff: and if he will make a statement.

Mr. Marples: I have received no recent communication from the Council. But, after discussions with it in February, an experimental panda crossing has now been installed at the Amroth Road junction.

Mr. Thomas: Is the right hon. Gentleman aware that there is considerable anxiety amongst the people who live in the Cowbridge Road district of Cardiff,


because the panda crossing has already been the scene of further accidents? Will he give urgent consideration to the question of safety on this road, where a number of people have lost their lives during the past few years, and far more have been injured?

Mr. Marples: It was installed on 2nd April and it is now 11th April. I will consider this. I will look into the matter and see what accidents have occurred since then. I will look at it and ask the council to communicate with the hon. Member.

Mr. Lipton: Is it not clear that these pandas have become a flop and that the sooner they are given up the better?

Mr. Marples: As usual, I disagree with the hon. Gentleman. The panda crossing has great advantages. The point is that it can come into operation when there is an immediate demand for pedestrian help, and at other times the free flow of traffic is not disturbed. I am looking closely into the experiments that are being carried out, and we must have experiments. The great thing is to try to improve the situation all the time and I can assure hon. Members that if this experiment wants amending it shall be amended and if experience shows that it should be kept, we shall do so.

Mr. C. Hughes: Is the Minister aware that the people of Wales will appreciate it if he will treat Cardiff with the same consideration as he treats the capitals of England and Scotland?

Mr. Marples: I personally am not responsible for what happens to roads in the capital of Scotland, but I can assure the hon. Gentleman that Wales gets more than its fair share of expenditure on roads.

Oral Answers to Questions — RAILWAYS

Hellifield-Blackburn Line (Passenger Services)

Mrs. Castle: asked the Minister of of Transport what report he has received from the Central Transport Consultative Committee concerning the closure of the Hellifield to Blackburn railway line; and what recommendations were made for

the provision of adequate bus services to replace the railway services affected.

Mr. Marples: The Central Committee has made a recommendation, which I am now considering, approving the British Transport Commission's proposals for the withdrawal of passenger services on this line. Those proposals include arrangements for the augmentation of some existing bus services. The Central Committee has made no special recommendation about bus services.

Mrs. Castle: Is it not a fact that an undertaking was given by Ribble Motor Services Ltd. that it would duplicate certain bus services on the Clitheroe-Blackburn line? Will he see that that promise is carried out? Secondly, is it not a fact that people who live in remote villages on this line and work in Blackburn will now be totally cut off from any public transport at all, and that others will have only a bi-weekly service? Will he let the House know in due course what bus services he intends to see provided for these people?

Mr. Marples: I will certainly look into the question of the promise which the hon. Lady says was made by Ribble Motor Services Ltd., and consider the position, but I must also consider this report and make a decision. I should prefer not to comment until I have read the whole of the report.

Mr. Mellish: Does not this raise the whole principle of the closing of lines? Although they may well be uneconomic—

Mr. Speaker: Order. This Question is confined to the Hellifield to Blackburn line.

Mr. Mellish: Although this line may be uneconomic from the point of view of bringing in cash, is not there at any rate a social need? Will the Minister say that he will consider whether it should remain in operation and that the question of a subsidy will be considered?

Mr. Marples: The best thing I can do is to consider the merits of the proposal, the case put forward by the objectors and the findings of the Committee and announce my decision; and this I will do.

Chasewater-Newquay and Launceston-Plymouth Lines

Mr. Scott-Hopkins: asked the Minister of Transport, in view of the proposed closing of the Chasewater-Newquay and Launceston-Plymouth lines by British Railways, what alternative measures to provide transport he has in mind.

Mr. Marples: The British Transport Commission's proposals for closing these lines are still under consideration by the Transport Users Consultative Committees. In examining the proposals the Committee will consider the need for alternative services. I can only take action if the Central Committee makes a recommendation.

Mr. Scott-Hopkins: Will my right hon. Friend give an assurance to the House that if it should be decided to close these lines he will accept responsibility for providing alternative transport for freight and for passengers using the existing lines at the moment?

Mr. Marples: I will consider whatever recommendations are put before me at a later stage. I should prefer at this stage not to comment on details but to look into every single aspect of the matter before making a decision.

Mr. Scott-Hopkins: May we take it from my right hon. Friend's reply that he will give an assurance that he will do what he can for the people in these rural areas?

Mr. Marples: I will not give an assurance, except to say that every point put forward will be considered.

Capital Expenditure

Mr. L. Thomas: asked the Minister of Transport what is the total planned capital expenditure on British Railways for the year 1962 under the modernisation plan.

Mr. Marples: The maximum allocation made to the British Transport Commission for investment in British Railways and their associated activities—including hotels and catering services—in 1962 is £141·1 million.

Mr. Thomas: Whilst we all want to bring this modernisation plan forward

as quickly as possible, may I ask whether my right hon. Friend would agree that, in view of the intensive and extensive traffic studies that are now being made with the object of reshaping the railways particularly—both physically and operationally—such enormous expenditure should be deferred until those studies are complete?

Mr. Marples: My hon. Friend really is on to a good point there, but when we have started modernisation on a certain scale and for a certain project we must complete it. I agree with my hon. Friend that future modernisation must rest on the longer-term planning that we have in mind, and on the traffic studies that are now going forward because, if we are to modernise, we want to modernise that part of the system that will be really effective.

Mr. Popplewell: Will the Minister stand firm against the suggestion of his hon. Friend? There has been far too much of this stopping and starting in regard to modernisation. It is extremely costly to the country, and is not in the best interests of the transport system as a whole.

Mr. Marples: There will be no stopping things that have already started, but the point is that when we have new starts they should be applicable to the system we shall have in the future, and not to modernising a 19th century system of railways.

Oral Answers to Questions — TRANSPORT

Devon (Holiday Traffic Routes)

Mr. P. Browne: asked the Minister of Transport what plans he has for increasing alternative holiday traffic routes in Devon in 1962.

Mr. Marples: The eighteen alternative holiday routes brought into use last year will again be available this year. Arrangements have also been made for two more alternative routes to be used if conditions in Exeter and Okehampton call for them.

Mr. Browne: May I congratulate my right hon. Friend on the fact that during the past three years he has provided


grants amounting to £73,000 to be devoted to alternative routes for holiday traffic? Will he bear in mind, however, that this is only a partial remedy and that what is wanted is a higher priority for new and improved traffic routes in the West Country? Will he promise the House that in the near future he will give a higher priority to the West Country, as he is getting on so well with his urban schemes?

Mr. Marples: I must ask my hon. Friend not to congratulate me—it is such an unusual occurrence that I find that I cannot bear it. My hon. Friend must not be surprised to know that each county in the United Kingdom considers that its own claim is vastly more important than the claim of any other county—Devon, Cornwall, Lancashire, Cheshire, Yorkshire and all the other counties.

Rural Bus Services (Jack Committee's Report)

Mr. P. Browne: asked the Minister of Transport if he has consulted county councils with reference to the majority recommendation of the Jack Committee Report.

Mr. Ridley: asked the Minister of Transport what proposals he now has for improving rural bus services.

Sir J. Maitland: asked the Minister of Transport what action he has now taken to solve the problems which the Jack Committee was set up to investigate.

Mr. Marples: I have consulted all the national associations of local authorities about the Jack Report. I am not yet in a position to announce Her Majesty's Government's decision or any action to be taken arising out of the recommendations in the Report.

Mr. Browne: Is my right hon. Friend aware that his Answer to my last Question gave me my first opportunity to congratulate him, and that I regret that I am not able to congratulate him on his Answer to this Question? Will my right hon. Friend bear in mind that unless the makes a decision on the rural transport problem soon, it will become a salvage operation and there will be a great deal more difficulty than if he took

action now? Does he appreciate that, with the closing of branch lines, this problem is urgent?

Mr. Marples: I agree that it is urgent. But I have been looking at the speeches made during the debate on the Budget in the last two days, and I find that almost every hon. Member who has spoken has said that Government expenditure should be reduced. If we implement the recommendations of the Jack Report, Government expenditure will be increased.

Mr. Ridley: Is my right hon. Friend aware that every branch line in my constituency has been closed; that not every one of my constituents has a motor car and that therefore there is a real problem? It may not be necessary to have a subsidy from the taxpayers' purse. Will the Minister say that he will study this problem most urgently and produce a policy fairly soon?

Mr. Marples: I will study it very urgently indeed, but the dispensation of Exchequer money is only too easy to a willing Minister.

Mr. Browne: In view of what he said about the speeches made during the last two days, is my right hon. Friend aware that it does not necessarily mean that he has to produce more Exchequer money in order to solve the problem? Is he aware that we want a proper debate on the problem, and that, as branch lines are being closed, we simply must have alternative forms of transport for people in the rural areas?

Mr. Marples: If my hon. Friend wants a debate, that is a question for the Leader of the House.

Sir C. Osborne: Will my right hon. Friend look at the possibility of allowing small independent bus operators to run local services in rural areas and not allow the big companies to object?

Mr. Marples: Certainly. If they wish to run services they can apply to the traffic commissioners for a licence.

Travel Facilities, North-Western Area

Mr. Ellis Smith: asked the Minister of Transport if he is aware of the urgent need for better road travelling facilities


within the north-western area, and for more inter-city roads and bus services for people going to and returning from their employment; and what action he is taking in the matter.

Mr. Marples: The road programme includes many schemes, large and small, to improve traffic and travelling conditions in the north-western area. The provision of bus services is primarily a matter for the operators who are in the best position to assess local needs. Although the bus arrangements look complex on paper, I think they generally work well in practice. However, if the hon. Member has any particular cases of difficulty in mind, I will gladly look into them.

Mr. Ellis Smith: I am encouraged by that Answer. If the local authorities on whom the Minister puts the responsibility prepare constructive schemes on the lines suggested in the Question will the Minister give them sympathetic consideration?

Mr. Marples: I will certainly look at any scheme put up jointly by the local authorities.

Sir C. Osborne: Will my right hon. Friend look at cases where existing bus companies have practically a monopoly and oppose the running of a service in the villages by smaller bus companies, and see that the smaller bus companies are not prevented from doing so?

Mr. Marples: My hon. Friend is assiduous in these matters and I will ask him to give me details which I will look at.

Dipped Headlights (Birmingham Experiment)

Mr. Cleaver: asked the Minister of Transport whether he is aware of the successful outcome of the experiment carried out in Birmingham of asking motorists during darkness to drive with headlights dipped; and, in view of the substantial reduction in casualties during this fortnight, what further action he is proposing to take.

Mr. Marples: I have not yet received a full report on this experiment, on which I should like to congratulate the Birmingham City Council and its Chief

Constable. I will certainly take its results into account in any regulations about the use of headlamps which I may propose if Parliament gives me the powers for which I am asking in the Road Traffic Bill.

Mr. Cleaver: Is my right hon. Friend aware that I am very pleased to hear that? Will he also bear in mind the fact that the public have co-operated to a great extent in this matter and that 30 per cent. of the motorists are still driving with dipped headlights? As his Ministry is represented on the Brussels Working Party, in which the International Standards Organisation and the Commission on Illumination is interested, will my right hon. Friend implement any recommendations in regard to headlights which that body makes?

Mr. Marples: No. I think that what is wanted is a proper evaluation of what has happened in Birmingham. The number of accidents during the hours of darkness in that fortnight was 104, compared with 142 in the corresponding fortnight of the previous year, but a great deal of information is wanted about what the weather was like, and so on. I ask my hon. Friend to be patient so that we can evaluate on a scientific basis what has happened.

Sir W. Wakefield: Will my right hon. Friend consider having yellow lights on headlights, as is done in France, because that reduces the glare and the liability to accidents?

Mr. Marples: I have given consideration to that inasmuch as in Clause 13 of the Road Traffic Bill—which is now before Parliament, and which I hope every hon. Member will support in Committee—we have asked for control over the design and use of headlamps. I hope that the House will support me in those regulations. Of course, that would include the yellow lights to which my hon. Friend has referred.

Mr. Wainwright: Will the Minister look into the question of the intensity of the lights and the illumination of roads to make certain that dipped headlights are used where there is inferior street lighting and consider whether if there is good street lighting it is not necessary to have dipped headlights?

Mr. Marples: I am grateful to the hon. Member for that supplementary question because two years ago I asked the Road Research Laboratory to look into that matter. It made two clear points. The first was that the use of headlights was necessary where street lighting was non-existent or not very good and, secondly, that it was undesirable where the street lighting was first-class. I shall certainly consider the hon. Member's supplementary question.

Mr. G. Wilson: Does my right hon. Friend recollect that the Road Research Laboratory has already said that it did not think that amber headlights made any difference?

Mr. Marples: My hon. Friend will have heard another of his hon. Friends say that the Road Research Laboratory is wrong. The curious thing about traffic is that every individual has his own ideas and rejects the ideas of other people.

Motorists (First-Aid Kits)

Mr. Costain: asked the Minister of Transport what proposals he has to encourage motorists to carry first-aid kits in their cars.

Mr. Marples: The Highway Code urges motorists to carry first-aid kit in their cars and to learn its use; this advice has been stressed in the road safety campaigns which are run by the Royal Society for the Prevention of Accidents.

Mr. Costain: Is the Minister satisfied that many motorists in fact carry first-aid sets? Would he consider when reprinting the Highway Code giving some indication of what the motorist should carry in a first-aid kit?

Mr. Marples: Yes, but many things are put into the Highway Code and they are not always observed. For example, a driver is told
Be prepared: Carry simple first-aid materials
in his car and
learn first aid from the St. John Ambulance Association. St. Andrew's Ambulance Association or the British Red Cross Society".
Not many drivers do that, although I am certain that my hon. Friend has done so.

Mr. A. Lewis: Could not the Minister make a suggestion to manufacturers of cars that this is something which they could include in the car at wholesale cost when the car is new? It would be an advantage which would not cost much originally and it could go with the car when it was sold.

Mr. Marples: Yes, but there is not much point in having a Red Cross outfit in a car if people do not know how to use it. Otherwise they will be drinking the iodine and putting brandy on a cut.

Central Transport Consultative Committee (Annual Report)

Mr. Mapp: asked the Minister of Transport if he will publish the views of the Central Transport Consultative Committee for Great Britain expressed to him, which are referred to in lines 3 to 8 of page 4 of its Annual Report, House of Commons Paper 139, of 27th March.

Mr. Marples: No, Sir. The discussions referred to in the Report were confidential.

Mr. Mapp: Is not the Minister withholding from hon. Members the informed and vital advice of the consumers of transport, on the railways in particular? Is there not an over-riding burden, or at least a moral burden, on the Minister to ensure that their subsequent reports on the current Bill and the amplifications which the Minister has in mind should be made known and that the views of this consumers' committee, acting in its independent, detached way, should be known to hon. Members?

Mr. Marples: The full record of the Committee's minutes, like its minutes generally, is confidential and I should not be justified in asking that it should be made public.

Mr. Mellish: Is it not right that the House should be informed of the other point of view when a decision is taken to close a branch line? It is on record in the Annual Report that this is a negative policy. Surely we are entitled to know the views of consumers concerned—the numbers and so on—so that we may have an intelligent debate?

Mr. Marples: This passage of the Report does not deal with that at


all. It deals with the discussion in the Committee about the Committee's functions and also about suggestions put to me regarding the Transport Bill.

Channel Tunnel

Mr. Costain: asked the Minister of Transport, in view of the fact that a decision about the construction of a Channel link is a matter of urgency, what progress has been made in his discussions with the French Minister of Transport; and if he will ensure that a decision in principle is announced at the earliest possible date.

Mr. E. L. Mallalieu: asked the Minister of Transport if he will give details of the machinery which has been set up for Franco-British Government consultation about the Channel tunnel; and what special sub-committees have been set up to deal with particular aspects of the problem.

Mr. Marples: I regret I cannot add anything at this stage to the Answers given on 20th December, 1961, and 14th March this year to my hon. Friend the Member for Brighton, Pavilion (Sir W. Teeling).

Mr. Costain: Is the Minister aware that the Chairman of the European Export Council has recommended that an early decision be made on this subject and, further, that it is holding up development plans in Folkestone, and can he give an assurance that we shall have some decision before the summer?

Mr. Marples: I cannot give that assurance. I want to disabuse my hon. Friend on that particular assurance that he asks for. We can proceed only as fast as we can, which we are doing, with the French Government, and both Governments together are considering both a tunnel and a bridge.

Mr. Ellis Smith: Will the right hon. Gentleman bear in mind that there are urgent capital expenditure schemes required in Britain, particularly in industrial areas, before he agrees to embark on a large-scale capital expenditure of this kind?

Mr. Marples: Every consideration will be borne in mind.

Mr. Gresham Cooke: Is my right hon. Friend aware that private enterprise

interests have agreed to build a tunnel free of cost from the national point of view as ordinary private enterprise business?

Mr. Marples: Of course they have agreed to put up the capital on certain conditions. It is the conditions that I want to examine fairly closely.

Hired Vehicles (Road-worthiness)

Mr. Roy Jenkins: asked the Minister of Transport whether the recommendation of a coroner's jury, after an accident involving the death of two Birmingham young people and the serious injury of three others, that car hirers should be required to possess certificates of roadworthiness issued by his Department before letting out vehicles on hire, has been brought to his notice; and what action he proposes to take.

Mr. Marples: Yes, Sir, this case has been brought to my notice. Anyone who can be proved to have hired out a vehicle in an unroadworthy condition can be prosecuted under the existing law. Hired vehicles are covered by the provisions of the vehicle testing scheme. I doubt whether further legislative provisions would materially strengthen the existing law.

Mr. Jenkins: One point of the recommendation was that there should be a distinction between the strictness of roadworthiness certificates required for hired vehicles and private vehicles. In the case of the ordinary vehicle, the owner or driver may be expected to know a good deal more about its roadworthiness than in the case of a driver of a hired vehicle. Would the Minister consider whether he might not make stricter requirements for hired vehicles?

Mr. Marples: No, Sir. Statutory provisions exist for hired vehicles as well as privately-owned vehicles in this matter. Enforcement is a matter for the police, and the courts can punish. The case which the hon. Gentleman has mentioned is a tragic one about which I am extremely sorry. I am told that the hirer of the vehicle, although he was prosecuted, was not convicted, but I am afraid that I do not know any more of the details than that.

Motor Cars (Night Rallies)

Mr. Turton: asked the Minister of Transport whether he is aware that the holding of motor-car rallies at night continues to cause considerable disturbance; and whether he will introduce legislation to prevent this practice.

Mr. Gough: asked the Minister of Transport if he is aware of the continuing nuisance being caused by organised motor rallies between the hours of midnight and 4 or 5 a.m.; and if he will now take steps to deal with this ever-growing problem.

Mr. More: asked the Minister of Transport whether he is aware of the continuing annoyance caused by the holding of nocturnal motor-car rallies in rural areas; and whether he will now take steps to empower the police to exercise a reasonable control.

Mr. Marples: I am aware that a few of these events cause a degree of disturbance. I am considering, in consultation with interested bodies, whether some measure of control is called for.

Mr. Turton: Will my right hon. Friend consider whether the organisers of such rallies should not notify both the local authority and the local police when rallies take place? At the moment they go on all night in many cases and villagers can get no sleep at all.

Mr. Marples: I have been in touch with the police about this. They tell me that the volume of complaint is small in relation to the large number of rallies which are held. For the most part, clubs are anxious to avoid criticism and they co-operate with the police. They are willing to accept advice about routes and timing. The real difficulty is that people who live on a very quiet road get disturbed and it contrasts very vividly with their normal peace and quietude, whereas in large centres like Bermondsey and other places where there is heavy traffic going to the docks the residents are disturbed all night and they tend to get used to it.

Mr. Gough: Would my right hon. Friend therefore be surprised to hear that in the last six weeks there have been rallies practically every weekend in my constituency? Would he further agree that the trouble nowadays is that these rallies are not organised by the normal

organisations, like the R.A.C., and they constitute a very serious menace between the hours of midnight and 5 a.m.?

Mr. Marples: I agree that certain cases are disturbing. I am bound to say that in my view such cases are in the minority, but it is still irritating when they happen. At present, I have no powers to ban or control rallies and any new powers required would have to be sought in the Road Traffic Bill which is now going through Parliament. I therefore hope that, if hon. Members feel agitated about this, they will table Amendments which can be considered during the Committee stage of the Bill.

Mr. Lipton: Will the Minister favourably consider any Amendments which some of us might want to table to make all-night rallies illegal? It is no use wasting the time of the Committee if the Minister has already made up his mind against it? In any event, what is the use of all-night rallies?

Mr. Marples: I hope that I take the hon. Gentleman with me when I say that I am always open to argument, especially when it comes from the hon. Gentleman himself.

Sir G. Nicholson: Does my right hon. Friend recollect that I am in correspondence with him about the outraged feelings of the villagers of Thursley in my constituency? He replied in his first letter, which I am sure that he did not write himself, that this is part of the price of progress. Does he realise that, although the number of protests may be few, when they are made they are deeply felt? Will he try to put himself in the place of people who cannot sleep all night because of these terrible things?

Mr. Marples: I have in my brief both the letters which I sent to my hon. Friend, both of which I dictated myself. I say in one letter:
Let me say at once that the residents of Hambledon are indeed fortunate to have such a persuasive—and vigorous—advocate of their cause.

Mr. Jeger: Will the Minister pay particular attention to his hon. Friend the Member for Horsham (Mr. Gough) and take note of the fact that many rallies are not organised by the ordinary motoring organisations but by the Young Conservatives?

Mr. Marples: They are the better rallies.

Southampton Docks (Road Traffic)

Mr. J. Howard: asked the Minister of Transport what plans he has to cope with the increasing volume of road traffic to and from Southampton docks.

Mr. Marples: During the next few years we intend to carry out two important trunk road improvements—the Chandlers Ford and Otterbourne Bypass at a cost of £1,850,000, and the Totton Flyover, including the widening of the Redbridge causeway and bridge, at a cost of £500,000.
In addition, four important classified road improvement schemes in the Southampton County Borough area which will ease the flow of traffic to the docks have been included in the road programme to 1964–65 and the total cost is £1,259,000. I am circulating details of these in the OFFICIAL REPORT.

Mr. Howard: I am obliged to my right hon. Friend for that reply, but may I ask whether he is satisfied that these schemes will meet the ever-increasing volume of traffic, with 1,000 to 1,500 vehicles collecting passengers in the docks a week or so ago? Is he satisfied that these schemes are keeping pace with the increase of traffic there?

Mr. Marples: I am quite certain that they will go a great way towards meeting the needs of most of the ordinary traffic in the area; and that Southampton has its fair share, just as Devon, Cornwall and other places have their fair share.

Following are the details:

Scheme
Estimated cost including land
Grant



£
£


1. Six Dials Roundabout, including the first section of a new approach road to the docks. Work on this has just started
377,000
282,786


2. Bitterne Road, A.3024, including a gyratory system at the junction
82,000
61,500


3. Redbridge Road, A.35, widening of road and rail-bridge bridge
600,000
450,000


4. Dorset Street Link
200,000
150,000

One-way Schemes, London (Western Exits)

Mr. Fisher: asked the Minister of Transport what plans he has for experimental one-way traffic arrangements on parallel western exits from London such as the Embankment, King's Road, Fulham Road, Old Brompton Road, Cromwell Road, Kensington High Street, Bayswater and Notting Hill Gate.

Mr. Marples: I have been considering the western exits for possible one-way schemes. I have already put proposals about Fulham Road and King's Road to the local authorities concerned. As soon as any plans for other routes are ready, I shall announce them. One difficulty is that a one-way scheme, to be successful, requires two routes which are reasonably parallel and close together, and some exits, I am afraid, do not provide these.

Mr. Fisher: In view of my right hon. Friend's great success in these experimental one-way working arrangements in other parts of London, would he try to expedite the western exits, where some of the groupings I have mentioned would, I think he would agree, lend themselves to such schemes?

Mr. Marples: Where they lend themselves to schemes like that, I certainly do my utmost to force them through, but I must say that, in certain instances, the local authorities have not been as quick as they ought to have been in assisting me. In any case, they will not be allowed to delay things for too long, because I am quite certain that some of these one-way schemes would be of great benefit to London's traffic.

Motor Vehicle Equipment and Parts (European Agreement)

Mr. Gresham Cooke: asked the Minister of Transport what consideration he has given to the advantages to the United Kingdom of ratification of the agreement concluded under the auspices of the Economic Commission for Europe relating to the adoption of uniform conditions of approval and reciprocal recognition of approval for motor vehicle equipment and parts: and if he will make a statement.

Mr. Marples: Nine European countries have now joined or signified their intention of joining this Agreement: and this Agreement promises to make important progress in establishing uniformity throughout Europe in the requirements for and conditions of approval of motor vehicle equipment and parts. With a view to encouraging trade between the United Kingdom and the Continent and in the light of the advantages to be gained by United Kingdom manufacturers, Her Majesty's Government have decided that it would be in the best interests of this country to adhere to the Agreement as soon as possible. Legislation will be required in order to enable the Government to fulfil their obligations under the Agreement, and I shall shortly propose an Amendment seeking the necessary powers in the Road Traffic Bill now before the House.

Mr. Gresham Cooke: Is my right hon. Friend aware that he will be in the Chancellor's good books, as what he is proposing will undoubtedly help exports?

Mr. Marples: As Minister of Transport, I always like to be in the good books of my right hon. and learned Friend the Chancellor.

Oral Answers to Questions — SHIPPING

Facilities, Manchester Area

Mr. Ellis Smith: asked the Minister of Transport if, with a view to extending and improving shipping facilities in the Manchester area, he will seek to arrange a meeting between his Department and the relevant authorities to discuss the modernisation of the Port of Manchester and of the Manchester Ship Canal.

The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett): No, Sir. This is a matter for the Manchester Ship Canal Company.

Mr. Ellis Smith: Will the Minister consult his right hon. Friend with a view to suggesting to the Ministry that it should take the initiative? If not, will he ask local authorities to take the initiative? Is he aware that these suggestions were put to me by some of the biggest industrial concerns in the Greater Manchester area at a meeting where constructive proposals were made

which had the same objects as those contained in my Question?

Vice-Admiral Hughes Hallett: As the law stands now, my right hon. Friend would be reluctant to take the initiative in a case such as this, but I point out to the hon. Member that the Rochdale Committee is sitting at present and is expected to report later this year on the whole question of the major ports.

Moorings

Sir J. Langford-Holt: asked the Minister of Transport how many moorings for boats and ships are maintained by his Department, and at what total annual cost.

Vice-Admiral Hughes Hallett: One hundred and thirty-one moorings are owned and maintained by the Ministry of Transport at a present cost of about £140,000 per annum.

Sir J. Langford-Holt: In view of the fact that the Admiralty maintains over 1,000 of these moorings at presumably about the same cost of £1,000 per annum, would not my hon. and gallant Friend get into immediate consultation with the Admiralty to see whether at least some public money can be saved?

Vice-Admiral Hughes Hallett: These matters are gone into very closely with the Admiralty. The cost of maintaining moorings varies with their size. The position is kept under review and we are satisfied that at present we cannot reduce the present cost of maintenance.

Sir J. Langford-Holt: asked the Minister of Transport, in view of the fact that of the seven moorings maintained by his Department at Ballachulish Bay, Argyll, at an annual cost of £7,000, only one has been used for a total period of twenty-two weeks in the last four years, whether he will now have the six unused moorings removed with a view to saving public money.

Vice-Admiral Hughes Hallett: No, Sir. The moorings are not maintained primarily for peace-time use and in so far as their small use reflects a decrease in the number of ships laid-up, I welcome it.

Sir J. Langford-Holt: Is my hon. and gallant Friend aware that, whatever explanation he may give of this, there


appears on the surface to be no reason why, at any one time, there should be only one of these moorings? Are there not methods by which moorings can be kept reserved? One appreciates that there is a dispersal element here, but this continued complacency is quite unjustified.

Vice-Admiral Hughes Hallett: This possibility of keeping the moorings in reserve and laying them when the emergency comes has been considered, but it has been found that it would take so long to do it that any change would be inadvisable.

Sir J. Langford-Holt: In view of the wholly unsatisfactory nature of that reply, Mr. Speaker, I beg to give notice that I will raise the matter on the Adjournment.

Cross-Channel Communications

Mr. J. Wells: asked the Minister of Transport what representations he has received from shipping interests on the subject of improved cross-Channel communications.

Vice-Admiral Hughes Hallett: My right hon. Friend is in constant touch with the shipping industry and it with him on a number of matters affecting cross-channel communications. As regards a Channel tunnel or bridge several representative organisations have already given us their views.

Mr. Wells: May I have an assurance from my hon. and gallant Friend that he will give particular attention to the representations of the special committee of the Merchant Service Officers' Association which believes, I understand, that efficient Customs, larger ships and modern port installations would be a great deal more efficient and a good deal cheaper than either a tunnel or a bridge?

Vice-Admiral Hughes Hallett: The current joint study being undertaken with the French Government includes examination into possible improvement of the cross-Channel shipping services.

Docks (Rochdale Committee's Report)

Mr. Gower: asked the Minister of Transport when he expects to receive the Report of the Rochdale Committee on the Docks of the United Kingdom.

Vice-Admiral Hughes Hallett: During the summer.

Mr. Gower: In view of the difficulties which have arisen from the over-concentration of shipping in the Port of London and on Merseyside and as there are other excellently equipped ports in many parts of the United Kingdom, including South Wales, whose capacity is not at present being fully employed, does my hon. and gallant Friend agree that it is most desirable that the Report should be available as soon as possible?

Vice-Admiral Hughes Hallett: Yes, we entirely agree about that. We want to get the Report as soon as possible, but I cannot anticipate what the Committee's Report will be?

Mr. Mellish: Has the Committee finished taking evidence?

Vice-Admiral Hughes Hallett: Not quite.

Mr. Jeger: Is the Rochdale Committee finishing in the summer with the major ports and then going on to the minor ports, or will it complete its work altogether when the Report is published in the summer? What is the intention?

Vice-Admiral Hughes Hallett: The Committee intends to issue only one Report. We shall have to see what that Report is before we decide whether there should be another investigation.

Mr. Gower: Will my hon. and gallant Friend give an assurance that there will be no invidious distinctions between major and minor ports?

Vice-Admiral Hughes Hallett: There again, we shall have to wait and see what the Report says.

RURAL TRANSPORT (LOCAL AUTHORITIES)

3.31 p.m.

Mr. Raymond Gower: I beg to move,
That leave be given to bring in a Bill to empower certain local authorities to provide omnibus services in rural areas; and for purposes connected therewith
My proposed Bill is not an elaborate Measure, but is designed to meet what is widely acknowledged to be a particular need in many parts of the United Kingdom today. I will not detain the House by discussing the causes which have led to the closure of many branch railway lines and to the cessation of many country bus services, but in consequence of these happenings there are certainly some parts of the country today where public transport services are inadequate.
We have had ample evidence of this at Question Time today. Fortunately, increasing numbers of the population are able to provide for their own transport needs—but this very fact exacerbates the problems of those who cannot do so. These include the elderly, housewives and young people, and my Bill, if enacted, would permit district councils to acquire and run public service vehicles, subject to the granting of permission by the appropriate traffic commissioners. It would, of course, prevent these authorities being involved in the costly procedure of promoting Private Bills in this House.
It may be objected that some local authorities have already indicated that they do not wish to run bus services of this kind. If so, the decision would still rest with them. The powers in the Bill are merely permissive. They are not mandatory and the Measure constitutes

no threat to existing services or to established operators. Even where a service has been discontinued by an operator, the council in the area affected would still need the approval of the appropriate traffic commissioners before it could run such a service. In such circumstances it may occur to hon. Members that the consent of the traffic commissioners should be readily granted.
Another argument in opposition which may be raised is that it would seem to anticipate any action which the Government may take to implement some or all of the findings of the Jack Committee. I respectfully submit that the House should not deem this argument as a real ground for opposing my modest Bill. If leave be given to introduce it. and if the Bill is enacted, some far more ambitious schemes could be begun by Parliament and they would not be prejudiced in any way by my Bill.
The Bill would, at least, make possible some immediate steps to deal with what, in many parts, is a serious and pressing need.

Question put and agreed to.

Bill ordered to be brought in by Mr. Raymond Gower, Mr. Rupert Speir, Mr. E. L. Mallalieu, Mr. Julian Ridsdale, Mr. Harold Finch, Mr. Bryant Godman Irvine, Mr. Harold Davies, Captain Henry Kerby, Mr. Maxwell-Hyslop, and Commander Donaldson.

RURAL TRANSPORT (LOCAL AUTHORITIES)

Bill to empower certain local authorities to provide omnibus services in rural areas; and for purposes connected therewith, presented accordingly and read the First time; to be read a Second time upon Friday, 18th May, and to be printed. [Bill 94.]

Orders of the Day — WAYS AND MEANS

Considered in Committee [Progress 10th April].

[Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

AMENDMENT OF THE LAW

Question again proposed,
That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description or for all goods to which any of the several rates of tax at present applies.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

3.37 p.m.

The Financial Secretary to the Treasury (Sir Edward Boyle): A lifelong addiction to reading Wisden's "Cricketers' Almanack" in bed prompts me to mention to the Committee that I think I am the first Treasury Minister since the war to take part in no fewer than six Budget debates. I know that there are a great many hon. Members who wish to speak today and I intend, therefore, to confine myself, in the main, to two subjects: first, my right hon. and learned Friend's fundamental Budget judgment—that is, his decision to leave the general level of taxation virtually unchanged; and, secondly, the question which is in the minds of all hon. Members, namely, how we can attain a steady and sustained level of economic growth in the 1960s.
There are two reasons why my right hon. and learned Friend has introduced a neutral Budget this year—neutral from the point of view of its general effect on the economy. The first reason is that the primary aim of the Government's policy, in the short term, must be to strengthen the balance of payments. My right hon. and learned Friend reminded the Committee in his Budget speech that the overall balance of payments figures

for 1961 show a fairly dramatic change compared with the previous year.
Taking the current and the long-term balance together, there was an improvement of about £400 million and even a small credit in the second half of the year, compared with a massive deficit of £296 million in the second half of 1960. But, as my right hon. and learned Friend went on to remind the Committee.
…we still have a considerable way to go to achieve a satisfactory surplus on our balance of payments, having regard to our heavy and continuing obligations for defence, aid and investment overseas."—[OFFICIAL REPORT, 9th April. 1962; Vol. 657. c. 963–4.]
It always seems to me that, in this context, it is most important that we should bear in mind just how great are Britain's obligations, not only our internal obligations but our overseas ones as well.
However keenly hon. Members may feel about growth and the index of production—about which I shall have a good deal to say later in my speech—it just could not have been right for my right hon. and learned Friend to introduce a Budget which appeared to indicate that last year's difficulties were over, before our balance of payments had been fully restored.
I listened with great interest, as I am sure we all did. to what the right hon. Gentleman the Leader of the Opposition had to say about this on Monday, and his words were to a considerable extent echoed and repeated by what the hon. Member for Dewsbury (Mr. Ginsburg) said yesterday. There were a number of technical points in his speech which I will consider and to which I will see whether I can send a reply, but his main line of argument was much the same as that of the Leader of the Opposition.
The Leader of the Opposition said:
Last year's crisis was to a very large extent a crisis"—
not on current account, but—
on capital account.
He rather surprised us by adding:
For that reason, I should not myself oppose a sharp increase in Bank Rate as a necessary means of dealing with it"—
not quite the doctrine that we used to associate with the right hon. Member for Huyton (Mr. H. Wilson), but I have no doubt that the Economist will accord a


warm welcome to so distinguished a convert to its views.
The right hon. Gentleman went on to say:
…the Chancellor seemed to me to have overweighted the dangers of the situation last July and to have applied remedies which I believe were unnecessarily severe."—[OFFICIAL REPORT 9th April. 1962; Vol. 657, cc. 1019–20.]
I am quite sure, with all respect, that the Leader of the Opposition is wrong on both those points. The situation last July, as I myself pointed out in the House at the time, was that we had excess demand for labour on the home front, but no rise in exports. I do not believe that the improvement in our current balance in the second half of last year would have taken place but for the measures to restrain demand which my right hon. and learned Friend introduced. It is just as important now as it was then that we should be in a position to take full advantage of the export opportunities ahead.
The second reason why my right hon. and learned Friend has not introduced a Budget designed of itself to expand home demand is that, as he said, the total increase in home demand over the next twelve months is likely to be substantial. It is quite true that there has been some easing of demand since the middle of last year, but some of the causes of this easing of demand have been temporary—for instance, the initial check to consumption as a result of the rise in prices brought about by the imposition of the regulator. We certainly are not in a recession at the present time.
Unemployment is at 2 per cent.—the same figure, incidentally, as it was in the first quarter of 1960, when, as we now know, pressure of demand was building up fast. The total number of people in employment today is about 150,000 higher than it was at that time. What is more, as my right hon. and learned Friend pointed out in his Budget speech, there are sound reasons for expecting both an increase in home demand and a rise in exports from now on.
So far as home demand is concerned—and I make no apology for repeating some of the figures here, because they are, after all, fundamental to the debate—current expenditure on goods and services by public authorities is likely to

continue its steady rise of about 3 per cent. per year. Investment in the service and distribution industries is likely to rise by 8 per cent. in real terms during 1962, while the rise which has already been announced in public sector investment will fully offset the decline in private manufacturing investment, and it is likely that later in the year there will be renewed investment in stocks.
Stock building, as we know from experience, is apt to lag for a while behind an increase in demand, but suddenly catches up with sharp effect upon the economy. This is just what happened in 1955 and 1959. Very few hon. Members on either side of the Committee forecast with any degree of accuracy early in 1959 what was to happen later in the year. The reason was that after a period of low stock building, stock building suddenly advanced rapidly and put out all the calculations even of those most skilled in these matters.
Finally, total personal spending is likely to be up a year from now by 4 per cent. in real terms, partly because all the other factors making for expansion are likely to bring about a considerable rise in real personal incomes, and also, as I have already said, because the prospective movements in the world economy are likely to favour the expansion of our sales abroad. On the one hand, we can expect a continued expansion in North America and Western Europe, while there is also a strong probability that the primary producing countries are going to do rather better.

Mr. Roy Jenkins: What the Chancellor did not do, and what I do not think the Financial Secretary to the Treasury has yet done this afternoon, is to reconcile the estimate of 4 per cent. as an increase in personal consumption with the 2½ per cent. which has been talked about as a maximum for the increase in incomes. Is this based on some assumption by the Government about an increase in hire-purchase commitments or a decline in the rate of savings, or both? Could we know what is in the Chancellor's mind?

Sir E. Boyle: I am glad the hon. Gentleman has asked me that question. I will answer it fully to the best of my ability.
So far as consumer spending at home is concerned, I spoke just now about the general factors making for expansion and the likelihood of a rise in personal incomes. The hon. Gentleman is quite correct. A great many hire-purchase contracts end in 1962, and I would have said that the ending of so many hire-purchase contracts, coupled with the reductions in Purchase Tax in the Budget, coupled with the other factors, as I have mentioned, are likely to bring about a higher rate of increase in personal spending than we had previously thought. As to the Chancellor's figure of 2½ per cent., I hope that we shall do better than that this year, but it does not affect the Chancellor's figure so far as incomes policy is concerned.
I shall be coming on to incomes policy later, but I say now to the Committee that I think it is clear from the White Paper that the figure of 2½ per cent. was not just related to what we expected to do in the near future. It was also related to the average of what we have done during the last two or three years. The important thing, surely, is to get production going again, to increase our competitive position in the world and increase exports before we relax on the incomes policy. That is the answer to the hon. Gentleman. The figure was deliberately chosen with reference not just to what figure of production we shall achieve this year, but to what average figure we have achieved over the last few years.
I was talking about the overseas situation, and I was saying that we can expect a continued expansion in North America and Western Europe, while there is also a strong probability that the primary producing countries are going to do rather better. That may affect the terms of trade a little adversely from our point of view. On the other hand, as we know, from the export point of view if the primary producing countries do better that is helpful to this country. All this means that we ought to be able to achieve a considerable rise in our exports, provided that we make available the right goods at the right price.
It is the Government's view that the prospective rise in export demand, interacting with the expansionary factors on the home side, ought to bring about a considerable rate of expansion during

the next twelve months. I think that we shall be able to meet the prospective demands on our resources, and I was glad to hear last night my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) in his thoughtful speech, come down, perhaps a little doubtfully, on the same side.
Of course, if it should prove desirable to stimulate the home economy, my right hon. and learned Friend has a whole range of means of doing so. He can not only employ the Customs regulator which, as my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) pointed out, can be used in either direction, but he can also relax the present degree of monetary restraint as well. I am sure that my right hon. and learned Friend has been right to hold firm at the present time.
When it is suggested that a deliberate stimulation of home demand would be an effective means of encouraging exports, I can only reply that I do not think that such a proposal is borne out either by our own experience or by that of our principal trade competitors. Our whole object is, rather, to create conditions in which exports lead the growth of the economy, as they have conspicuously done in other countries where the growth record has been outstandingly good.
That leads me to the second part of what I want to say to the Committee. Firm monetary and budgetary policies and the avoidance of extra demand are essential both to the strength of sterling and to the security of our balance of payments. But these things by themselves, as many hon. Members on both sides of the Committee have said, are not enough; I fully agree that the restriction of home demand will not of itself bring about the combination we all desire of a more rapid rate of growth, a stronger external position, and a more stable price level.
The hon. Member for Cardiff, South-East (Mr. Callaghan) referred yesterday to the O.E.C.D. 1962 survey on the United Kingdom. He must have been gratified by the fact that three right hon. Gentlemen on the Treasury Bench had been issued with the document when he was speaking. I hope that this survey will be widely studied by hon. Members


on both sides of the Committee. In so far as it is, by implication, critical of the past policies of the Government I make no complaint of that. Gracious me, similar O.E.E.C. country chapters of ten years ago were just as critical of some of the policies of the party opposite.
But I hope that hon. Members, whatever their views, will pay special attention to the concluding paragraphs of the survey, paragraphs 47–52 on pages 30 and 31. There is a great deal here which the Government would warmly endorse. For instance, paragraph 48 advocates
the achievement of a steady and significant export rise as the major dynamic element in economic growth",
and goes on to say:
The United Kingdom will not achieve this without improving its international competitive position. Hence the importance, under present circumstances, of keeping production costs steady and, indeed, of reducing them wherever possible—The Government's policies in respect of incomes and profits"—
I am still quoting from the survey—
are thus of cardinal importance for the future expansion of the United Kingdom economy The wage and dividend pause requested in July had a useful initial effect: the damage done to the principle of the pause by the few exceptions that took place was small. The really important task from now on lies in establishing a more lasting policy to succeed it. The problem for the Government and for both sides of industry is to evolve a more permanent system for the determination of money incomes which is accepted as just and reasonable by the community as a whole and which, in conditions of full employment and steady growth, can assume the maintenance of a satisfactory competitive situation in international trade.
That is exactly the approach of the Government to the problems of income policy and their relation to growth.
I noticed that the right hon. Gentleman the Leader of the Liberal Party said in his speech yesterday:
The first thing that we want to see is the Government saying that they have taken a political decision to make growth the first object in the economy …—[OFFICIAL REPORT, 10th April, 1962; Vol. 657, c. 1191.]
Perhaps the right hon. Gentleman would refresh his memory of the White Paper on Incomes Policy.
The very first paragraph of that White Paper contains these words:
The Government's policy is to promote a faster rate of economic growth and a more vigorous development of our export trade. This depends on maintaining the strength of the pound and our competitive efficiency,

which in turn depend on our ability to keep costs and prices stable.
The concluding paragraph takes up the same theme:
The Government reaffirm that their policy is one of securing faster economic growth. But this can only be achieved if we can introduce a greater element of realism into what we as a nation do about incomes.
Those who criticise my right hon. and learned Friend for not introducing specific measures to help our export trade seem to me to overlook the fact that the Government's decision to embark on an incomes policy was probably the most important economic decision taken by any Government since the decision during the war to accept a high and stable rate of employment as a Government responsibility. Furthermore, those who criticise the implementation of this policy ought to bear in mind the very real difficulties which any incomes policy is bound to entail.
The main object of the incomes policy so far, as the Committee knows, has been to reduce the general scale of increases in incomes to a more proper relationship with the growth of national production. This object has been explained many times over—in ministerial speeches, in my right hon. and learned Friend's letters to the T.U.C., in the White Paper, and so on. But, of course, the Government realise that an absolutely flat level of pay increases is not something that could be maintained in the long run. It would not be fair to individuals, nor would it be sound economics. We must, therefore, arrive in due course at some means of providing for special circumstances in which a case can be made for a divergence from the general rule.
That having been said, it is, however, equally essential to do this in some way which ensures that what is designed to be a change in relativities does prove to be, in effect, simply a change in relativities. We must avoid the indiscriminate copying of an increase achieved in one sector by other sectors where there is not the same justification. This is what tended to happen before last July. Hon. Members who have read the O.E.C.D. report on prices, chapter 5, will no doubt have taken full note of all that was said about the tendency for wage increases to spiral in the past.
The Government have no intention of allowing the situation which prevailed before last July to return. Their task must be to work out, in consultation with representatives—

Mr. James Callaghan: Brave words!

Sir E. Boyle: The hon. Gentleman says, "Brave words". Whoever governs this country in the 1960s—I hope that it will be the Conservative Party—has to grapple with this problem. It is no good responding to this by saying, "Brave words". This is a problem which is fundamental to Britain achieving a fine competitive performance and a satisfactory rate of growth in the sixties.

Mr. Callaghan: I do not dispute any of that. I appreciate that the hon. Gentleman has not finished, but nothing that he has said so far leads me, having had twenty-five years' experience of wage negotiations, to conclude that he can do anything about it.

Sir E. Boyle: I think that the hon. Gentleman is very much too defeatist about this. I must say that if that is the spirit—I do not want to engage in unnecessary controversy—in which the hon. Gentleman approaches this problem, that very much weakens his claims to be taken seriously as a "Shadow Chancellor".
This is the problem. The task of the Government must be to work out, in consultation with representatives both of employers and of employees, new ways of proceeding which will handle the special problems to which I have referred, without producing inflationary consequences.
This will not be easy, of course, but the Government accept this task because they know its relevance to the growth and to the competitive power of our economy; and they will not be deterred either by all-night sittings in the House or by by-elections.

Mr. Callaghan: The battle for the policy will not be won here.

Sir E. Boyle: The hon. Gentleman is right in saying that it will not be won here, but we are quite prepared to defend the task in the House for as many days

and nights as hon. Members opposite like. [HON. MEMBERS: "No Guillotine?"] There was no Guillotine the other night.
I want to say just a word about profits and dividends in relation to the Government's incomes policy. [HON. MEMBERS: "Hear, hear."] Hon. Members opposite need not worry; I shall speak about this at some length. The figures which I quoted yesterday at Question Time show that there has been a considerable and increasing response to my right hon. and learned Friend's request for dividend restraint. I do not see how anyone, whatever his political views, who wishes to accord a high priority to economic growth, could support the idea of statutory dividend limitation, or any attempt to lay down rules for the profits of individual firms or industries. It just could not make sense. If one wishes to achieve a more competitive economy, to penalise new, efficient businesses simply could not be right. There must be a considerable variation in profits as between one company and another if our present economic system is to work efficiently.
Profits are bound to vary far more than wages with the state of trade, and it would be neither fair nor sensible to make a strict year to year comparison between them. But over a longer period—I emphasise this—there is a strong tendency for total profits to move roughly in proportion to wages. This was shown very strikingly in a diagram, which I commend to hon. Members, printed in the last Report of the Council on Prices. Productivity and Incomes.
In any case, there has been a considerable fall in profits during the last eighteen months, so that there is no immediate problem of their increasing disproportionately to wages and salaries. In the second half of 1961, gross trading profits were 7½ per cent. lower than in the first half, and 12½ per cent. lower than in the first half of 1960.
My last point on incomes policy relates to what the hon. Member for Cardiff, South-East said yesterday. I do not agree with the hon. Gentleman—I read his speech this morning—that we have a less fair distribution of the national income than we had ten or twelve years ago. For instance, the hon. Gentleman made a lot of play with the increased


burden of taxation borne by the average manual and white-collar worker. Let us put the comparison in this way: the average manual worker in 1955—which was the base year which the hon. Gentleman chose—earned £9 5s. 6d. a week, and in 1961 he received £12 17s. 10d. After allowing for changes in Income Tax and the health contribution—we have argued this often enough, and I am not arguing now that it is not a form of tax—the increase in his earnings was 31 per cent. The average salary earner received a net increase after tax of 30·6 per cent. During the same six years, the consumer price index rose by only 15 per cent.
Of course, the yield of tax from P.A.Y.E. taxpayers earning less than £1,500 a year has risen very substantially since 1955, because incomes themselves have risen so fast during this period. In 1949—I have looked up the Blue Book figures—there were 13·9 million incomes of less than £400 a year, 2·4 million incomes of between £400 and £500 a year, and 2·8 million of between £500 and £1,000. In 1960, there were not 13·9 million incomes but only 4·6 million incomes in the lowest bracket, and there were 10 million incomes between £500 and £1,000 a year. One must make allowance in all these comparisons for the very large rise in personal incomes during the 1950s.
I noticed also that the hon. Gentleman, like so many hon. Members opposite in talking of these subjects, said nothing about the very large increase in social service benefits during the 1960s. Many of them, like the increase in educational standards, are not at all easy to quantify in money terms, but, when we are considering the distribution of the national income, it is surely very relevant that the social services account for an appreciably larger share of the national income today than they did ten years ago. One must take account of such things as the development of secondary modern schools in the countryside, and of an enormous number of factors which have affected the distribution of wealth and the consumption of wealth in this country.
I do not consider that my right hon. and learned Friend has placed an unfair reliance on indirect taxation. It is worth

remembering that our highly progressive system of Income Tax and Surtax -it remains a highly progressive system despite the Surtax concessions of last year's Budget, as my hon. Friend the Member for Manchester, Moss Side (Mr. F. Taylor), in his admirable maiden speech yesterday, rightly pointed out—yields a proportion of 53 per cent of total tax revenue today, compared with 50.8 per cent. during the financial year 1950–51, the last complete year when hon. and right hon. Members opposite were in office. That is certainly worth remembering when hon. Gentlemen accuse us of placing too much reliance on indirect taxation.
My right hon. and learned Friend's proposal in his Budget to narrow the spread of Purchase Tax has received a large measure of support since it was announced. As a Birmingham Member, I know very well how strongly certain industries felt that they were hampered in their competitive effort by the 50 per cent. rate of tax. As for the tax on sweets, this has been advocated constantly by thoughtful people, not only Conservatives, in the correspondence columns of the Press during recent years, always with the rider, "I do not believe that any Chancellor will have the courage to do it". Thank goodness that one Chancellor now has had the courage to make this wholly justified extension of the range of tax.
What matters most to the ordinary families is the rate of growth we can achieve if we can only hold productive costs steady and secure a lasting improvement in our international competitive position. I shall deal briefly with certain other matters which are important for growth.
First, investment. I am not sure how far it is generally realised that, looking at the past three years as a whole, there has been a major shift of resources into investment. The ratio of fixed investment to the gross national product was 17½ per cent. in 1958; 17½ per cent. in 1959; 18½ per cent. in 1960; and just over 19 per cent. in 1961. In fact, the growth of fixed investment has been extremely rapid. In 1961, total fixed investment was 7½ per cent. higher in real terms than in 1960; 18 per cent. higher than in 1959; and nearly 80 per cent. higher than in 1951.
If one considers fixed investment by manufacturing industry alone, in 1961 it was 20 per cent. higher than in 1960; 40 per cent. higher than in 1959; and about 70 per cent. higher than in 1951. It is true that fixed investment in manufacturing industry fell 10 per cent. between the third and fourth quarters of last year; but, at the end of 1961, manufacturing investment was still 11 per cent. higher than it was a year earlier, and 32 per cent. higher than in the fourth quarter of 1959.
I mention this because of what is so often said about having a stagnant economy. As my hon. Friend the Member for Scarborough and Whitby so rightly said yesterday, we have added very substantially to our productive capacity during 1960 and 1961. How far we can use that capacity must depend first and foremost on the success of our competitive performance in overseas markets. Looking ahead to the future, we need to have not only a sufficient overall level of productive investment but also some degree of co-ordination of investment plans in order to secure the most economic use of our resources. This, of course, will be one of the chief tasks of the National Economic Development Council.
I notice, by the way, that, since my right hon. and learned Friend referred to the rôle of the N.E.D.C. in his Budget speech, it has been suggested that the Government are planting all responsibilities on the Council. The Times used the words, "waiting for Neddy". Nothing could be further from the truth. The Government have no intention of unloading their proper responsibilities. I believe that some confusion has arisen because the way in which the Council is likely to work has been misunderstood. Its members were appointed in February. It had its first meeting in March, and it will have its second meeting shortly in May. I can hardly imagine a less satisfactory way for members of the Council to start work than for them to be confronted with a figure for a desirable rate of growth before they have had any real chance to consider what it should be and what it implies; and, of course, this must involve a good deal of preliminary study by officials.
Settling on a figure must have practical implications both for the policy of

the Government and for both sides of industry. As my right hon. and learned Friend said in his Budget speech:
What the Council must do is to set an ambitious but realistic target figure. Both sides of industry, the Government, and, indeed, all sections of the community, must be prepared to face up to the practical consequences involved in its achievement".—[OFFICIAL REPORT, 9th April, 1962: Vol. 657. c. 969.]
We intend to have a very much more realistic target figure than, for example, the one which the right hon. Member for Huyton produced in the New Statesman some time ago, which was absolutely annihilated by so skilful an economist as Alan Day the following week. Of course, there is a long list of factors relevant to growth, like tariffs, the recruitment and training of labour and restrictive practices, all of which will definitely be within the Council's terms of reference.
Yesterday, my right hon. Friend the President of the Board of Trade spoke about the importance of measures designed to increase the mobility of labour. As the Committee knows, there has been a good deal of hoarding of labour during recent years, and this was one of the main reasons which influenced my right hon. and learned Friend the Chancellor to introduce his economic regulators last year. From the point of view of promoting economic efficiency, it is much better to curb excess demand by a measure which affects a very wide range of industries by a small percentage of indirect taxation rather than by a severe use of hire-purchase controls which introduces a sort of artificial cycle into certain industries and positively encourages the uneconomic use of labour.

Mr. Callaghan: Are the Government learning?

Sir E. Boyle: The hon. Gentleman asks whether we are learning. My right hon. and learned Friend explained this point very fully last year. I do not remember that we had much opposition in 1956 to a severe use of hire-purchase control, but I was glad to hear the support of hon. Members opposite for the regulator in last year's Finance Bill.
There is the importance not only of productive efficiency, but also of efficiency in distribution and commerce.


I was glad to see that the O.E.C.D. survey specifically mentioned the importance of salesmanship and after-sales service.
Finally, and by no means least, if we are to achieve a more dynamic economy based on a steady and significant export rise, there must be a proper planning of priorities in the public sector of the economy. This is a matter which we have discussed on a number of occasions during the present Session. However keen we may be to see a further expansion of the public services, we must leave sufficient room in the economy for those kinds of economic activity, whether in the private sector or the public sector, which are vital to Britain's competitive performance in world markets.
Perhaps it is worth while to consider what will be the rewards for our society if we succeed in creating conditions in which exports lead to a steady and sustained growth of our economy. At home, we should see a wide extension of personal freedom and opportunity even more marked than that of the 1950s. Abroad, we should be in a stronger position to play our full part as a member of the Western Alliance. I believe that these rewards are in our grasp provided we adhere to the policies which I have described and, in particular, to my right hon. and learned Friend's firm budgetary policy, and the incomes policy above all.
We on this side of the Committee mean to support these policies, not just for their own sake, but because we believe that their objective of a dynamic and competitive economy is in the interests of the nation as a whole. We shall not be deterred from pursuing them, for we are convinced that it would be folly to do anything Which might prejudice our chances just when the hope of success stands so high.

4.13 p.m.

Mr. Douglas Jay: The Financial Secretary to the Treasury has made a cheery speech, but his misfortune is that he has to defend the record of this Government. Nothing that he has said this afternoon alters the two conclusions which have emerged from this debate: first, that the Government have no policy for expanding production in Britain this year; and, secondly, that

what they really care about is pushing more and more of the tax burden on to those least able to bear it. [HON. MEMBERS: "Oh."] I will give some facts and figures about that later.
The most extraordinary thing about the Chancellor of the Exchequer's speech was that he never mentioned the production record from one end of his speech to the other. Whether this was because he was not interested in it, or because he was ashamed of it, I am not sure. Yesterday, the President of the Board of Trade made a speech of almost incredible complacency. He did not think that there was anything wrong with the economy, any more than he thinks that there is anything wrong with I.C.I. or the Imperial Tobacco Company. He was very pleased with a slight rise in exports in March to £312 million, seasonally adjusted; and we must be very grateful for any ray of hope which he can give us.
But the export figure of £312 million leaves us in this situation. Exports in the first three months of this year were ½ per cent. higher than in the final quarter of last year and about equal to the average for 1961 as a whole. But imports in the first quarter of this year were 1½ per cent. higher than in the previous quarter, and again about equal to the 1961 average. If production rises, surely it is obvious that imports will rise. I therefore cannot see how the President of the Board of Trade finds any reason to be complacent in this figure.
What we have had from the Government, and from the Financial Secretary today in this debate, is not a practical plan or proposals for increasing production and exports, but yet another sermon about incomes similar to those which we have heard many times. But the Chancellor of the Exchequer has thrown away another opportunity of achieving a real agreed incomes policy by giving us a mere mockery of a capital gains tax instead of a real one. No one is impressed by this tax. The Times said yesterday that the City of London greeted it with relief rather than with alarm. Later in the day we heard that it was all cheers in the City. In fact, the Stock Exchange yesterday had its merriest day since the economy was knocked back six months ago.
The Chancellor of the Exchequer virtually admitted that this was only a mock tax by telling us that he was unable for forecast its yield. He had no difficulty in forecasting the yield of the new tax on sweets and soft drinks, which will be £50 million in a full year. He tells us that he feels unable to make moral judgments between television sets and clothing. But he has no difficulty in making moral judgments between capital gains made in five months and capital gains made in seven months. Apparently, he thinks that the former are wicked, but the latter perfectly legitimate. If the Chancellor of the Exchequer does not think that that is a moral judgment, I wish he would tell us what sort of judgment it is.

Mr. G. R. Mitchison: Immoral.

Mr. Jay: It is certainly an absurd judgment.
In my opinion, there is no less good reason for taxing capital gains than for taxing income; and there is no better reason for exempting gains made in a longer period than six months or three years than for exempting incomes earned after the first day of the week or after the eighth hour of the day.
Since there is to be a greater incentive in this country to postpone capital gains beyond the six-month period than there is in the United States, it inevitably follows from the figures which my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) gave yesterday that at least 95 per cent. of capital gains here will still remain tax-free. It is not surprising, therefore, that the Stock Exchange had such a merry day yesterday.
This shadow capital gains tax will do nothing real to remedy the drastic worsening of the distribution of incomes and rewards which the party opposite has been steadily engineering as about its one consistent policy over the last ten years. There has been a major return to inequality in these last years. Today, the Financial Secretary tried to dispute the figures of my hon. Friend the Member for Cardiff, South-East, which showed, broadly, that as a result of changes in direct taxation and insurance contributions those earning

under £1,500 have become worse off during the last five years and those earning over £1,500 have become better off.
But whatever the hon. Gentleman says, he cannot really deny that under the present system of taxation and insurance contributions, as we go down the scale from £10 a week to lower incomes, one pays at least as high a percentage of income in tax and contributions as those receiving higher incomes pay. If we add indirect taxation—this is something which the hon. Gentleman did not mention—paid in tobacco, beer and Purchase Tax, there is no doubt that we now have a system of taxation under which the lower one's income, the higher percentage one pays in direct and indirect taxation and in insurance contributions. That certainly applies to the man earning under £10 a week. If the Financial Secretary denies this, let him give us the figures.
The changes which the Chancellor is now making in Purchase Tax will, of course, carry these retrograde movements still further. Incidentally, he is retaining the 10 per cent. increase, which was supposed to be temporary last July, and is keeping the Surtax cuts in force at the same time.
Next, the tax is to be extended to the wholly new field of sweets and soft drinks as a food item for the first time under Purchase Tax. Thirdly, the Purchase Tax is to be raised from 5½ per cent. to 10 per cent. on the great bulk of real necessities—clothes, boots and shoes and furniture. That in itself is a major rise in taxation on necessities, and perhaps we can be told what is the extra revenue in a full year from this rise. Obviously, it will raise the cost of living still further and cut clean across the Government's so-called incomes policy.
How different this is from what we heard about Purchase Tax when right hon. and hon. Members opposite were in opposition. They then wanted to abolish it, except on a few luxuries. I well remember Lord Chandos making a speech here on how iniquitous it was to have Purhchase Tax on soap, and that was at a time when the great bulk of necessities like boots and shoes, clothing and furniture were exempt altogether. Now we are having Purchase Tax extended to these new commodities.

Mr. Arthur Lewis: And lollies.

Mr. Jay: Yes, lollies.
All this part of the effort of the party opposite to restore inequality in this country relates to the effects of taxation. But it is also true that incomes before tax have been growing increasingly unequal over the last ten years. The Chancellor himself gave recent figures in answer to a Question on 13th February, when he said that between 1950 and 1960 total wages increased by 87 per cent. Salaries, due partly no doubt to higher numbers, increased 119 per cent.: and dividends 145 per cent. over the whole ten years.
The Chancellor claimed, in trying to excuse these figures, that we must allow for additional investment through the retention of profits by companies. But the right hon. and learned Gentleman does not seem to understand that if we allow for extra capital amassed in this way, in computing the return on capital, we must also allow for retained profits as adding to the receipts of shareholders and the value of their capital. Otherwise, the Chancellor is giving them credit for forgoing these profits, and also assuming that they never received them.
We must, therefore, take account of the retained company profits which are one main source of capital gains. It is possible to calculate how great these have been in recent years. I am not saying that companies ought not to retain profits. Normally, I should welcome that; but we ought to understand what is going on. I am most indebted to the Financial Secretary for assisting me, in correspondence, in getting the figures right. I hope that he will educate the Chancellor also on the same point. The remarkable fact that emerges is that equity shareholders are now receiving an average addition to their capital through retained profits, without any subscription of new money, of well over £1,000 million a year, and this is the main fount and origin of the capital gains and "windfall State" in which we are now living.
I do not know whether the Chancellor has seen the booklet which the London Stock Exchange has produced. This red book is produced not by Transport House, but by Lord Ritchie and I am

sure, therefore, that the right hon. and learned Gentleman will look at it. It shows that the total market value of ordinary shares quoted on the Stock Exchange rose during 1961, which was not a very good year from that point of view, by about £1,700 million. At the end of 1961 the total market value of ordinary shares had risen since the end of 1958, in only three years, by £8,000 million or about 70 per cent.
Therefore, I do not think that we should leave that out of the calculation. [HON. MEMBERS: "Stagnation."] We never suggested that there was stagnation in equity shares. Of course not. The removal of dividend limitation has led to a rise in equity shares while the economy was stagnating.
I do not think it surprising, therefore, that so much of the efforts of the City are now devoted to the pursuit of capital gains, nor that the great mass of salary earners and white-collar workers as well as the wage earners are disgusted, as the by-elections show, with this system whereby the less work one does, the greater the reward one earns. In view of this, what extraordinary folly it was on the part of the Chancellor to hand out huge reliefs to Surtax payers a year ago, and incidentally, to give 25 per cent. of them on unearned incomes.
This year's Economic Survey throws a remarkable light on this action of the Chancellor a year ago, because these are the words in which it describes the state of the country at the beginning of last year when he took that decision:
At the beginning of 1961 the economy faced an increasing pressure of home demand upon resources and a loss of confidence in the pound owing to domestic inflation and a continued large deficit on the balance of payments.
This is a description of the country under the administration of right hon. and hon. Members opposite. In this situation, the Chancellor proceeds to cut Surtax by £83 million.
It is interesting, looking back on it, also to remember how it was that the Chancellor justified this cut at the time. He said in last year's Budget speech:
I believe that my proposals with regard to Surtax will have a dynamic effect upon the initiative and effort of individuals, including those engaged in exporting…"—[OFFICIAL REPORT. 17th April, 1961; Vol. 638. c. 822–3.]
Now we know.

Mr. Julian Ridsdale: Does the right hon. Gentleman not think it right to reward technicians in this branch of the economy?

Mr. Jay: Certainly I do; but I am analysing the effect of this great reform, which was introduced by the Chancellor a year ago.
We now know that from July, 1961, to January, 1962, the country suffered a 4½ per cent. fall in industrial production. Last year was not a year of stagnation. It was a year of decline. As far as I know, a fall in industrial production at an annual rate of 9 per cent., which we have had in the last seven months, is the steepest fall since 1932. And exports, which were to be stimulated, according to the Chancellor's speech, rose more slowly in 1961 than in 1960; in spite of which the President of the Board of Trade thinks that there is absolutely nothing wrong at all. I hope that the country, at any rate, will learn this lesson—that in the year of the heaviest cut that we have had in Surtax for the last twenty years we also had the heaviest fall in production that we have had during the last twenty years.
In any case, if the Chancellor really believes that direct taxation has a depressing effect, why does he not give some relief to the earners of the smallest earned incomes, in which the efforts of millions instead of a few thousands are involved? I do not know whether everybody realises it, but Income Tax now starts to operate for a single earner on incomes as low as £4 a week. In present conditions that is far too low an income, particularly when it is remembered that the insurance contribution is over 12s. a week. It is ridiculous for the Inland Revenue to be collecting very small amounts from millions of people in this way at obviously a great cost.
I realise that a number of these very small earners are, no doubt, in some cases, juveniles without dependants, but all these may be provided for by the personal allowances, and I think that it really is time that we gave relief in order to take a number of these small people out of Income Tax altogether.

Viscount Hinchingbrooke: Will the right hon. Gentleman make it clear, before he leaves

this point about inducements, whether he is talking about the psychological effect of the Chancellor's announcement or the economic effect? Because if he is talking about the economic effect—and his whole argument seems based on that—the right hon. Gentleman's comments are nonsense, since the concession on Surtax does not come into effect till next year.

Hon. Members: This year.

Mr. Jay: Unless the Chancellor thought that his announcement would have some psychological effect from the start, there would have been no point in making it two years in advance, presumably.
However, I can congratulate the Chancellor on one element in his Economic Survey and in his speech. He has now apparently abandoned his ridiculous 2½ per cent. target for the increase in output and growth of the economy this year. This is nowhere mentioned in the Economic Survey. But, as this has now gone, can we also assume that the Government have also abandoned their 2½ per cent. figure as the norm for wage increases? I can see no possible justification for retaining a 2½ per cent. limit on wage increases, if the Chancellor has abandoned his target for the annual increase in production. But, of course, under this Government we only get rid of this target at the expense of having no target at all.
I should have thought that one of the depressing effects on production in our economy, and a major reason why production continues to stagnate, is that industry has no target to go for. The French planners believe that one of the principal effects of their sort of planning is that at least it has a strong psychological effect.
But in addition to giving us no target at all, what does the Chancellor do now in the present depressed and deflated state of the economy, with production and exports flagging? He introduces an even more deflationary Budget this year than last year. I doubt whether the Committee has yet entirely realised that the Chancellor is now budgeting in the coming year for an overall deficit of only £74 million, compared with an actual out-turn for the year just ending of £211 million.
I do not believe that in the true sense this is a neutral budget, because, compared with what actually happened last year, after the July increases in taxation, the Chancellor is now giving a new deflationary twist to the economy of over £100 million, which, I should have thought—unless there are really strong expansionary forces which nobody seems to be able to detect except the Government—can only result in another year of stagnation if not of decline.
The Chief Secretary to the Treasury, in his rather grim way, at Question Time the other day, gave the House a defence of this policy. He told us that we are now well placed to expand exports. I suppose that if a man has been knocked flat on the ground one may comfort him by telling him that he is well placed to get up again. If one has one's middle stump knocked out of the ground, one may be told by the Chief Secretary one is well placed for the next innings.
But the point which is very much more frightening in the Chancellor's attitude than even in the Chief Secretary's is that the Chancellor told us, in spite of what the Financial Secretary has said today, not only that there is to be no expansion in 1962, but that there is to be no sort of plan for expansion, either. He said that a study would be undertaken by the N.E.D.C.; and that it would be for the N.E.D.C. to say what target figure for growth should be adopted; and that, meanwhile, the Government, in effect, were just sitting back and waiting for the tide to turn—but this is after eleven years, and it is after seven years of complete stagnation already. It is bad enough having all these Committees and Royal Commissions on relatively minor issues of policy to stop everything from happening. But now even the whole growth of the economy is to be under consideration for another year.
I therefore say this to the Government. I believe that they should at least adopt first as a target, the O.E.C.D. target of 4·2 per cent. a year to which the Chancellor, after all, has already publicly pledged himself both in Paris and the House. It is a relatively modest target when the French are working to 5·5 per cent. and compared to the roughly 10 per cent. advance which, for example,

both the United States and the Japanese economies achieved last year.
Having done that the Government should then make the achievement of this target their first priority in economic policy in 1962, and they should be prepared to adopt the planning measures necessary to see that that is carried out, I will briefly mention one or two measures which, I think, they should adopt. The first thing, I should have thought, is to stop pushing up prices while holding down incomes as they are still holding them down by the Budget and the new taxation.
How illuminating it is that again in the last half of 1961, while production was falling so steeply, prices rose faster than at any time for four or five years. The Chancellor, in his Economic Survey, here again admits that one of the causes of rises in prices was the taxation in July. We have had, in effect, a pay pause, but we have not had a price pause, still less a rent pause during these last few months.
Secondly, I believe that the Government must tackle drastically the continued scandal of under-employed areas all over Scotland and the North-East Coast and Northern Ireland, together with the gross congestion and inflated values in London and the South-East which is part of the same problem. The Parliamentary Secretary to the Board of Trade made an absolutely lamentable statement in the House yesterday at Question Time, when, instead of agreeing that the main need now is to get control of office development as a major problem of national employment policy, he trotted out the entirely new doctrine that the Board of Trade was not concerned with office building at all; and then went on to tell us that the Board of Trade was not even concerned with employment because that was for the Minister of Labour. It is not surprising that Scotland is in the position it is at the present time.
Really, the Parliamentary Secretary's attitude here was bureaucratic cowardice run mad. He is going back on The Employment Policy the White Paper of 1944, which said plainly that the main responsibility for policy here rested with the Board of Trade, which was responsible to the House of Commons. He is supposed to be the Minister


responsible for carrying out this policy. Does he not realise that much the greater part of the increase in employment in the South-East over these years has been office employment? Just to give one figure, in the ten years up to 1958 planning permissions for office development in central London alone involved new employment for 300,000 people. That would have meant a great deal in Scotland.
It is perfectly clear, I should have thought, and beyond dispute, that the problem of under-employment and depopulation in the North and West, with all the economic waste it causes, will never be cured till distribution of employment, not just the distribution of industry, is put entirely under one national Department—and I should have thought that it must be the Board—the local authorities are relieved of the present insupportable burden of compensation payments. If the Government think that it will take too long to do that, I recommend them to apply building licensing in regions other than Scotland, the North-East, the North-West, Wales and South-West that is a perfectly practical interim measure at the present time.
Finally, I do not believe that we shall ever get any planned economic progress till the Government abandon all these sordid manoeuvres by which the economy is held stagnant for three years, so that a six months' spurt may be engineered just before the next General Election. One of the main reasons for the poor performance of the country over the last ten years, which will do us so much harm in the long run, is the habit of the Tory Party of sacrificing national economic policy to party electioneering tactics.
As a result of this, we have no expansion, no social justice, and no plan. It is rather pathetic sometimes to remember that ten years ago some people were talking about a new Elizabethan age in this country. What we have had, in fact, is a new Edwardian age. We have had a decade of Premium Bonds, take-over bids, betting shops, hire-purchase frauds and all the rest. Under the party opposite, capital gains have almost become the national sport, and Mr. Charles Clore almost our national hero.
The President of the Board of Trade, in one of his more pious passages yesterday, told us that if industry is to succeed, we need a—
change of product, change of method, change of market—"—[OFFICIAL REPORT. April 10th. 1962; Vol. 657, c. 1183.]
In my opinion, if the country is to get moving, we need a change of policy, a change of values and a change of Government.

4.41 p.m.

Mr. Geoffrey Stevens: In the opening sentences of his speech, the right hon. Member for Battersea, North (Mr. Jay) said that he felt sorry for my hon. Friend the Financial Secretary to the Treasury because he had to defend the record of the Government. In his closing sentences, the right hon. Gentleman referred to the ten years' record of successive Conservative Governments as a record of take-over bids and things of that sort.
Has the right hon. Gentleman no eyes to see? Has he got the shortest memory in recent history? It is perfectly true that in 1961 we did not see progress at such a rapid rate as in the previous nine years, but has the right hon. Gentleman forgotten what things were like three, five or ten years ago? Is he seeking to try to convince his hon. Friends that material conditions have not very substantially improved in the last ten years? I thought that my hon. Friend the Financial Secretary not only made a very fine speech but was batting on a reasonably easy wicket.
Another comment which the right hon. Gentleman made in the earlier part of his speech referred to the opening speech yesterday of my right hon. Friend the President of the Board of Trade. The right hon. Gentleman said it was a very complacent speech. Is it wrong to acclaim the achievements of British industry? The Government are constantly asking British industry to export more. Is it wrong to pay an occasional tribute to those who respond to that exhortation? I have myself felt for a number of years that we cry our wares too little, particularly in the export markets of the world. Perhaps we are too modest as a nation. Perhaps we are unused to the sort of competition we meet in the markets of the world today. I should like to see a few more


Ministers crying the great achievements of British industry and thus helping our exports the world over.
The right hon. Gentleman had something to say about the overall burden of taxation, and he and his hon. Friend the Member for Cardiff. South-East (Mr. Callaghan) said something about the ratio between direct and indirect taxation. I, too, want to say something about that. but, first. I want to pay a tribute, because I do not think enough tribute has been paid either in this debate so far. or in the Press, to the four small but extremely useful things which my right hon. and learned Friend is doing in his Budget—the increase in the small incomes relief for Income Tax purposes, the increase of the age relief, the raising of the starting point of Estate Duty, and the abolition of the Revenue duties on sugar, cocoa and coffee. These four, and particularly the first three, will affect a relatively small number of people but will be extremely welcome because they go to the people who need them most.
The first thing to which I want to devote some time is the question of the extension of the Purchase Tax to soft drinks, sweets and ice-cream. Quite honestly, I cannot understand the outcry from the party opposite when my right hon. and learned Friend announced it. I should have thought that, given the existing level of Government expenditure—I know that there are some people who feel that Government expenditure should be curtailed more than it has been, and I may be one of them—the necessary revenue has to be raised. I should have thought that the essential prerequisite in deciding what new and additional taxes should be imposed was whether the new tax or the addition to an existing tax will put an extra burden on industry and send up the cost of production. I do not think anyone can claim that another halfpenny on a Mars bar or another penny on a gin and tonic will increase the costs of production. On that score alone, I think that this broadening of the base of indirect taxation is to be welcomed.
My hon. Friend the Member for Kidderminster (Mr. Nabarro) yesterday advocated broadening the base still further by bringing in a new tax on advertising. I hope that my right hon.

and learned Friend will be very careful before he does anything of that kind. With regard to advertising for the home market, there is quite a strong argument against putting a tax on it, but in regard to advertising for exports, it would be extremely harmful to increase the costs of a company's catalogues, brochures, leaflets and other such things which it is sending into the export market. I should have thought that to try to split expenditure on advertising between advertising for the home market and advertising for the export market would be an exceptionally difficult thing to do.
I think that my right hon. and learned Friend, instead of considering advertising as his next target for broadening the base of indirect taxation, should consider something else which is nonessential and could not conceivably add to the costs of production. I am thinking of betting. My hon. Friend the Member for Torquay (Mr. F. M. Bennett) mentioned this in the course of his remarks. Until last year, it has been very difficult to catch the bookmakers, and various Chancellors have tried with the telephone tax and one thing and another, but I should have thought that the existence of the betting shop today would mean that it would not be at all impracticable to tax betting. I should declare a non-interest here. I think that betting is one of the very few vices I have not got, but I do not see any particular harm in it. It is not because I want to make a savage attack on people who like to have a flutter, but if money has to be raised I should have thought it was a very good thing to go for.
What sort of yield would a betting tax be likely to produce? I do not know that any reliable figures are available, but my own guess is that the annual expenditure on fixed odds betting is between £350 million and £450 million, and, therefore, 10 per cent. or even 15 per cent., like the Purchase Tax rate on soft drinks and ice-cream, would bring in a nice yield.

Mr. A. Lewis: I am not disagreeing with the hon. Gentleman, but is he not aware of the fact that even now the Government are still discriminatory with their taxation policy with regard to betting, in that greyhound racing, which is followed mainly by working-class people, is


already taxed, whereas horse-racing, which is followed by the better-off section of the community, is not taxed? I agree with the hon. Gentleman that if we are to have a taxation of this sort, we should make it universal and apply it to all types of betting.

Mr. Stevens: I readily accept what the hon. Gentleman has said. Indeed, it is the sort of answer which I have given to certain supporters of greyhound racing who have written to me asking for my support to have the tax removed. I have said "No," but I should like to have it standardised by widening the scope to include all forms of betting.
I think that these new indirect taxes would have been better received if it could have been shown that the revenue derived from them could have been used to stimulate industry in general and exports in particular. Most people would agree that the encouragement of industry is more important than that a boy should be able to give a cheap box of chocolates to his girl friend. My right hon. and learned Friend has not been able to do anything like that this year. The Times is rather fierce about that. It says:
But, in view of the need to get exports moving strongly again, it becomes harder to understand why the Budget did not go out of its way to provide a lead, either by helping to reduce the costs or by providing incentives to more productive investment Both are conspicuously absent.
Obviously, from the viewpoint of revenue, it is a difficult decision, but I wonder why my right hon. and learned Friend did not go back over various Budget and Finance Bill debates of recent years and consider suggestions which have been made, notably by my hon. Friend the Member for Dover (Mr. Arbuthnot), for accelerated depreciation allowances against capital for tax purposes. Had my right hon. and learned Friend seen fit to bring in such an improvement, it is not without interest that it would have cost nothing this year. It would not have cost anything until 1963–64. It may be that it is not too late to slip in an extra Clause in the Finance Bill. That would not only have made people more willing to accept these additional indirect taxes, but it would have dealt with part at least of the criticism of The Times that there is no direct help to industry.
I return to the question of the burden of taxation and, in particular, the proportions in which the revenue is raised by direct and indirect taxation. The more figures that are obtained from different sources, the more different the figures are. My hon. Friend the Financial Secretary to the Treasury gave figures for 1950 of 50·8 and 492, which I accept. I had figures of 51 and 49, which are much the same thing. For this year, however, I make the proportions 56 direct and 44 indirect, whereas my hon. Friend gave them as 53 and 47. However that may be, it certainly means that the proportion of revenue raised by direct taxation under successive Conservative Governments has increased. That is a bad thing. Admittedly, it is a matter of opinion. There can be no hard and fast rule about it. As one goes to other countries, one sees differing situations. In the United States of America, 83 per cent. of revenue is raised by direct taxation, whereas in the Union of Soviet Socialist Republics the figure will shortly be nil.
The figures show that direct taxation has increased, is increasing and ought to be diminished. It taxes earning rather than spending. It is a disincentive to extra effort and an incentive to dishonesty. For that reason also, I welcome the move that my right hon. and learned Friend has made to broaden the base of indirect taxation.
I should like to say a word or two on the taxing of short-term speculation. I am, and always have been, an opponent of a capital gains tax. I am not an opponent of taxing the profits of those who use the Stock Exchange as an additional means of livelihood, the chaps who get in quickly and frequently and get out again at a profit. My right hon. and learned Friend has done no more than he said he would do. For that reason, as I read the newspaper forecasts of what he would do, I saw myself for the first time in 2½ years here marching through the wrong Lobby against the Government. The newspapers, however, were wrong, and I am glad to say that I shall not be doing that. I consider the tax as outlined by my right hon. and learned Friend essentially fair and reasonable.
Much of the success of my right hon. and learned Friend's policy depends,


however, upon the growth of production Four per cent. in real terms is a tremendous target. While The Times said that there was no direct aid to industry in the Budget, as my hon. Friend the Financial Secretary has pointed out, incomes policy is of the greatest indirect help; and so, of course, is a Budget which covers all but £74 million of expenditure above and below the line.
Again, so much depends upon cooperation—not between the two sides of industry. Yesterday, the hon. Member for Cardiff, South-East constantly referred to the two sides, as did my hon. Friend the Financial Secretary. There are three partners in industry. The less we talk about the two sides and the more we talk about the three partners, the better. Whatever else my right hon. and learned Friend may do in the future, his name will always be associated with his greatest triumph to date: bringing the three partners in industry together in the United Kingdom for the first time in the National Economic Development Council. That is a unique opportunity and a great achievement on his part.
Incidentally, my right hon. Friend the President of the Board of Trade yesterday referred to the fact that this is Productivity Year. I rather wonder where all the advertisement and publicity for Productivity Year has got to. I hope that the N.E.D.C. will be able to do something about this.
It would have been so easy on this occasion for my right hon. and learned Friend the Chancellor to have yielded to temptation, to have incorporated in his Budget a number of tax remissions and thus, perhaps, to smother the Liberal bushfire which is spreading so rapidly from Blackpool to Stockton and elsewhere. He has not done it. He has preferred the course of duty, and in doing so I suggest that he has served the nation well.

4.56 p.m.

Mr. Joseph Harper: As the new Member of Parliament for Pontefract, I should like, first, to pay a passing tribute to the late Member, who died suddenly last October at the comparatively early age of 62.
I understand that when making a maiden speech, one has to be careful not to be controversial. That is why I have selected the Budget on which to

speak. Therefore, if in my remarks I appear to be controversial, it has not been done deliberately or with malice aforethought.
The constituency that I represent is tripartite in character, consisting of the old Borough of Pontefract, the new Borough of Castleford and the Urban District of Featherstone. It is a compact area, easily manageable—let me hasten to say, from a travelling sense and not from a majority sense—and it has a very good history.
Historically, Pontefract was built around a huge castle that was built in the times of the Normans. Four sieges have taken place at that castle, which is now in ruins, and King Richard II of England and the Earl of Rivers were put to death in it. I do not know who put them to death. I do not lay that at the door of the Tories.
In addition, Pontefract is, unique in toeing a borough of long standing and having its own Royal Charter with the Commission of the Peace. Castleford has strong historical links in that it was a Roman settlement. The Roman road still runs from Pontefract to Castleford and is still an effective link between the two towns.
The most interesting history of the lot is that of Featherstone. Some older hon. Members will remember it and others will find it interesting, so I will go into a little detail. My doing so will enable hon. Members on the benches opposite to recharge themselves for the ensuing debate on the Budget. Some of the history of Featherstone was made no less than sixty-nine years ago, during the great lock-out of 1893. During that lockout an undertaking was given by the manager of the local pit to the workmen that he would not do a certain thing. Like a good many managers, he betrayed that trust and the men, not liking it one bit, uptipped the wagons which he had ordered to be filled with inferior coal.
The manager did not like that at all and he went for police reinforcements. But the police, all 269 of them, had gone to Doncaster races, so they were not available. He got his horse and buggy and want to Wakefield and asked Lord St. Oswald, the owner of a neighbouring pit, for protection for his own pit—as if the pit needed protection; it is still there.
As a result, the militia were called out from York and came under their captain to the pit, to find nobody there. When the people of the district heard that the militia were at the pit, they went to see what it was all about. After some brawling, the militia decided to return home and marched back to the station. However, the magistrate was at the station and he told the militia that their job was at the pit, so they marched back to the pit.
While all this was going on, two small boys, who had got tired of waiting for bonfire day, set fire to the stacks of timber in the colliery yard. The glow from the resulting conflagration could be seen in the sky and it drew people from all walks of life, not just miners, from surrounding districts to the spot. When they heard that the militia had agreed to go home, and had then come back, they started to stone the building in which the militia were housed. Without hesitation, the magistrate read the Riot Act of 1714, and the militia fired on the crowd, killing two and injuring 16.
Put that way, it might seem humorous, but it was not humorous at the time. I am concerned with the principle behind it and I, for one, am pleased that in the last sixty-nine years we have travelled along this hard and dusty road to the point where we no longer fire upon people who feel the need to demonstrate from time to time.
Coming back to the subject in hand, the Budget, everyone has been blinded with science this afternoon. We have had facts and figures from this and that and the other side. We have been inundated with figures, but nobody has mentioned those which really count-how much is drawn by old-age pensioners each week. I had hoped that the Tory Chancellor of the Exchequer would include something in his Budget to help the old people. A single old-age pensioner gets 57s. 6d. a week and a married couple get £4 12s. 6d. It might be said that they can also draw National Assistance, but some people are too proud to do so. They remember the old Public Assistance days when they were thrown out if they went into the offices too fast.
But even with National Assistance, which only pays the rent, that is all they

have to live on. From time to time some people, journalists and philanthropists and others, for reasons known to themselves, sometimes for the publicity and sometimes as a matter of principle, have tried to live on the old-age pension. They have failed dismally. In this Budget the Chancellor has failed to improve the lot of old people.
I am also concerned about the Budget's effect on the sweet trade. Pontefract is basically a mining area, but it contains a sweet trade which is world famous. In Featherstone, apart from the two pits—one was closed down in 1935—the only other industry, apart from a small clothing factory, is the "pop" trade. Both the sweets and "pop" trade are to "catch it". I agreed with my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), the Shadow Chancellor, when he said yesterday that the Budget was shovelling taxation downhill. I know a little about shovelling, for I have done plenty. This 15 per cent. Purchase Tax will restrict the home market.
During my election campaign I visited many sweet factories and talked to the workpeople and to one manager. When I asked him what he was doing about the export market, he replied that his firm did some exporting but that it was not really worth while and that the firm continued it only to maintain contacts while it waited for better things. I tried to put down a Question yesterday asking what would be done to help sweet manufacturers to develop their export trade as the home market was to be restricted. For once in a while, on this issue I am partly in agreement with the hon. Member for Kidderminster (Mr. Nabarro).
The other people who were not helped by the Budget are those receiving National Insurance benefits, the sick and others. Again, the rates are 57s. 6d. and £4 12s. 6d., at a time when people want building up and rehabilitating so that they can get back to work. If ever there was a policy of being penny wise and pound foolish it is this policy of paying only a small sum of money to people who are sick.
The subject of the Schedule A tax has been so well ventilated that it has been almost exhausted, but I ought to make a passing comment to show that I am somewhat interested. Anyone who leaves


£600 in the York County Bank, the Post Office Savings Bank, or any other bank can draw up to £15 a year tax-free, but if he uses that £600 to buy a house with a notional value of £16 to £20, he has to pay tax on that notional value. It is better to keep the money in the bank. If he uses the £600 to buy a caravan, he pays no tax.
I want to keep an open mind on this subject, because we may have to have a limit, but I think that within a limit Schedule A tax should have been abolished in the Budget. I bathe once a year and like most people who do I first put in my toe, then my foot, then my knee, and then submerge altogether. I had hoped that the Chancellor would take a running jump and get in straight away and abolish Schedule A tax altogether.
I dare not repeat what I have heard the capital gains tax called, for if I did I should have to hand in my resignation. There is no doubt that it is a farce. The "wide boys" have an answer to it already—and not all the brains in the country are in this building today. This is an example of "kidding" the public. While it is possible to "kid" the public part of the time, they cannot be "kidded" all of the time, as we shall see at the next General Election.
This is a dull, unimaginative, uninspiring and visionless Budget and apart from two things—the bounty to Service men and the relief to certain old people who have some money invested—it has failed the nation.

5.10 p.m.

Sir John Vaughan-Morgan: This is the first time in twelve years that it has been my privilege to follow a maiden speech and to congratulate the speaker, and I could not have chosen to follow a gayer or more humorous speech than that which has just been delivered. The hon. Member for Pontefract (Mr. Harper) follows a Member who was much loved on both sides of the House. I think that the speech we had today, if not entirely uncontentious, was sufficiently in the general tradition of maiden speeches, and was an outstanding example of wit.
I shall look forward to studying the hon. Gentleman's remarks on the history of Pontefract and his interesting analysis of the economics of the local sweet industry.

As far as I am concerned, Pontefract is mainly associated with those perfectly nauseating things called Pontefract cakes, and I am certain that the Board of Trade will bend its energies to seeing that all the Pontefract cakes are exported, particularly behind the Iron Curtain. But I congratulate the hon. Gentleman. We shall look forward to hearing him again, and, following the usual tradition on other occasions, my hon. Friends will tear him into little pieces, which I shall not be able to do today.
I congratulate my right hon. and learned Friend on his Budget. I find much to praise, and, on the whole little to condemn. If some of the remarks that I have to make are critical, it is because of the sins of omission rather than the sins of commission. My right hon. and learned Friend's Budget has been, if I may so put it, on a very small canvas. As regards the tax on sweets, my tenure of office at the Ministry of Health makes me welcome it whole-heartedly, and I cannot help hoping that he will look and make certain, which I have not yet been able to do, that the corollary to this tax, which is the Purchase Tax on toothbrushes and such things, is now completely abolished, which it should be.
If I might make one other comment on that point, I commend my right hon. and learned Friend's endeavours to simplify the structure of the Purchase Tax in reducing four rates to three, but I am a little confused by the fact that he chose this occasion to introduce a new rate of 15 per cent. This is putting himself back to square one and it might have been better to consolidate the tax structure at three rates. These are small points which can no doubt fall to be discussed on the Finance Bill itself.
The lingering sense of disappointment which I cannot help having is that there was in my right hon. and learned Friend's speech on the whole so little thought given to exports and the problems of exporting industries, and I am going to limit myself to this. To begin with, not nearly enough has been done in regard to the fuel tax. I cite only one industry, the paper industry. I have not a direct personal interest in this industry, but I have made a study of it. It is the sixth largest industry in


the country, and is at the moment facing intense competition from the E.F.T.A. countries. I am not complaining about that. This is a change that had to come and it must face competition, but it is finding itself put out of business very largely because of the margin of profitability which is being taken away from it by the increase in fuel tax last year, and I hope that we shall come back to a consideration of this on the Finance Bill.
The criticisms that I have to make are really more general than that. The Economic Survey stresses exports, and so did my right hon. and learned Friend. Everything is really based on our being able to improve our exports. My right hon. Friend the President of the Board of Trade tells us that the prospects are better. I think that this is true. There is a recovery in some of our traditional markets, of which we ought to be able to take advantage this year.
The Chancellor stressed the need for a sound economy for, I think his phrase was, a firm basis from which to expand. This is good stuff, but it does not carry us very far. Can we, within the framework of our present Budget, do more to foster exports? Do we appreciate the need to foster in particular the capital—intensive industries on which our success in the export field depends more and more? If one looks at and studies the pattern of our export success—and I agree with my hon. Friend the Member for Portsmouth, Langstone (Mr. Stevens) that we ought not constantly to decry the efforts of exporters—one sees that increasingly success has gone to those industries where capital is intensively employed, and where there is, on the whole, a comparatively low labour content.
I think that my right hon. and learned Friend may perhaps be pinning too many hopes on the National Economic Development Council. I plead guilty to being somewhat sceptical about planning. If, however, it has a limited scope it may succeed. We certainly know that planning by controls is useless, and I am not sure that planning by platitudes and persuasion may be any great improvement.
Times have certainly changed. There was a time when jolly little jokes would be made from these benches about

chucking another planner in the works. Little did we think that ten years later it would be our own Chancellor whom we were chucking into the works. My right hon. and learned Friend quoted the terms of reference of "Neddy", but are not these the terms of reference which have been on the desk of every Chancellor? Is there really going to be any greater help given by the public restatement of the necessary steps by "Neddy"? I may be sceptic about this, and it is my sincere hope that I am proved wrong.

Sir William Robson Brown: My right hon. Friend made the point about the Chancellor being a planner thrown into the works. It might be more accurate to say that this Chancellor will be a spanner to tighten such nuts as want tightening in the economy, and maybe "Neddy" will be the answer more than anything else.

Sir J. Vaughan-Morgan: I pin more faith on the Chancellor than on "Neddy". I pin my faith on my right hon. and learned Friend, and not on an advisory council. I may be a sceptic, but it is my sincere hope that I shall be proved wrong.
Again, on the matter of exports, I congratulate my right hon. and learned Friend who rightly took credit for the great improvement that there has been in export finance and in the facilities for export credit and export credit insurance. This is a continuation of the liberalising policy which has been going on at an increasingly rapid rate over the years. As one who for a time sometimes did battle with the Treasury on this issue and found it somewhat obdurate, I warmly congratulate my right hon. and learned Friend, my right hon. Friend and my hon. Friends on the continuing improvement in its attitude. I sometimes wonder whether this is not due to a change in the permanent staff at the Treasury and in the advice which is given, and whether a certain knight's move from the Board of Trade has introduced a new appreciation of the importance of the Export Credits Guarantee Department. That Department, to which we can never pay sufficient credit, is a wonderful instrument, and we must do everything we can to help its work.
My right hon. and learned Friend prayed in aid of his arguments upon export incentives the admirable F.B.I. Report. He would probably agree that there is a great deal of confusion in the minds of many people on the subject of incentives and subsidies. He is absolutely right in turning his face rigidly against any form of subsidies for exports, open or concealed. In the long run they can do nothing but damage to our interests. We have far more to lose than to gain from any form of competition in this field between the nations.
I cannot help welcoming my right hon. and learned Friend's conversion on this issue. It is less than a year since he was defending the North Atlantic Shipping Bill, which advocated a subsidy, and one of his arguments then was that it would help our exports. On that occasion he chided me in a very charming manner for my puritanical approach. I welcome his recruitment to the ranks of the puritans. I entirely agree with all that he said on the subject.
There is only one sound reason for exporting, namely, that it is profitable—not that it is fun, but that it is profitable. Whoever invented the awful slogan about exporting being fun has never tried to sell his goods abroad, having to sit up late at night typing reports in some sleazy, second-rate hotel, in some corner of a foreign land that is anything but England, racked with home-sickness and probably suffering very much after entertaining a thirsty but recalcitrant customer. It is certainly not fun, and I hope that we shall not hear any more of those exhortations to export.
My right hon. and learned Friend did not have time to dwell upon the rest of the F.B.I. Report, but he will probably agree that what is important is not particular subsidies or incentives but the question whether or not the whole climate of our fiscal system is helpful to exports. I have absolutely nothing to cavil at about the Budget proposals in that respect, but I would draw my right hon. and learned Friend's attention to one passage from the Report, which says:
…any country which has a high ratio of direct to indirect taxes is at a disadvantage in export markets when competing with a country

whose fiscal system is weighted in favour of indirect taxation.
The Report goes on to point out that the United Kingdom ratio of direct to indirect taxation is about the same as the Continental average, but probably slightly higher than Germany, Belgium and Italy, and appreciably higher than France. These are our main competitors in world markets, and that small margin between us can be of vital importance to Britain's power to compete in world markets.
Within the taxation which industry bears there must be a slight shift from direct to indirect taxation. I refer my right hon. and learned Friend to a speech which my hon. Friend the Member for Mitcham (Mr. R. Carr) made last July, when he outlined the right approach to the question of taxation and exports. His theme, in a nutshell, was that in our predicament we must do everything we can to foster capital-intensive industries.
So far we have not had a word from the Government on the theme of the use or misuse of labour in our economy. It was not so last year. When my right hon. and learned Friend introduced his second regulator, the pay-roll tax, he said:
The use of such a measure as an economic regulator would have the added advantage that when we are faced with a situation of chronic shortage of labour it would act as an incentive to economy in the use of manpower and to investment in labour-saving equipment."—[OFFICIAL REPORT, 17th April, 1961; Vol. 638. c. 808.]
Is not that still true? My right hon. and learned Friend has yielded to the chorus of obloquy and surrendered his unused powers. I agree that it was not a popular proposal. If it is any consolation to my right hon. and learned Friend—and I do not think it is—he had one friend then, and I was he. But I must qualify my support. I thought that it was brought in at the wrong time, for the wrong reasons, and sought to bring in the wrong amount. Now it is abandoned and, instead, we have just a faint hint that there may be a place for such a tax. That is qualified by the fact that it must await a comprehensive review of business taxation.
Is that all that we are going to have? In his third Budget can my right hon. and learned Friend not amplify his views


on this matter? Surely, now that he is admirably double-banked, he has time to think about these matters. I state categorically that within the scope of taxation of industry there should be a mild shift from direct to indirect taxation, and that more of the cost of the social services should fall on the employers' contribution and less on the direct taxation contributions from industry.
I know that my right hon. and learned Friend is giving consideration to these matters, and I hope that he will be able to bring his thoughts to a concrete conclusion fairly shortly. It is on that issue that we may have difficulty if and when we enter the Common Market. I know that my light hon. and learned Friend is a man of courage, vision and energy, and I hope that from him we shall have (that radical reform of the taxation of industry which we need if we are to maintain our place as a world exporter.

5.28 p.m.

Mr. A. G. Bottomley: I join with the right hon. Member for Reigate (Sir J. Vaughan-Morgan) in paying tribute to the maiden speech made by my hon. Friend the Member for Pontefract (Mr. Harper). I agree that he showed a humour and local knowledge which many of us envy. We shall look forward to further contributions from him with much interest. I am afraid that it is not possible for me to follow the right hon. Member in his remarks about the Budget and the Chancellor. He said that he did not like Pontefract cakes. It appeared by his general comments that he liked liquorice allsorts.
In a sense, I am making my second maiden speech. Thanks to the electors of Middlesbrough, East, I am back in this honourable House once more. I told the electors that when I reached the House of Commons I would raise the question of unemployment. I never expected again to see in my lifetime queues for the dole, but this is happening today in Middlesbrough, East, where there is an unemployment rate of 9 or 10 per cent. Men who have been in the steel industry for 25 or 30 years are now out of work. They are the men who provided the basis for our economic recovery. Now there is little care

or thought for them. Boys and girls who left school last Christmas still have not obtained a job.
The first thing I did was to appeal to the Leader of the House to do something about it. I did not get a very satisfactory answer from the right hon. Gentleman. I pursued the President of the Board of Trade and he was not at all helpful. The Minister of Labour was less helpful. He had nothing to say, but referred me to the President of the Board of Trade. I looked at the Budget in the hope that it would give me some encouragement, but there was none. I thought that I might be wrong, that there might be better prospects than I had seen. So I took the opportunity to see what local industrialists had to say about the Budget. The northern region representative of the Federation of British Industries said that it was "pretty uninspiring." The national president of the Ship Building Employers' Federation said:
The Budget does nothing for shipbuilding. It does not mean a thing so far as heavy industry is concerned.
Other remarks by leading industrialists were: "Bitterly disappointing"—"Expansion of trades and exports neglected". I am therefore absolutely right. This coincides with my own judgment that the Budget holds out no hope of improved employment prospects in that part of the country any more than for other parts, like Scotland and elsewhere where there is unemployment at the present time.
If we are to do anything to help these basic industries of the Tees-side, we must encourage greater capital spending on new industrial plants and equipment. The only way to do this is by directing investment into the proper channels. So, as I say, the Government have done nothing to help the unemployment situation on Tees-side and in Middlesbrough, East in particular. I tell the Government that in Midlesbrough, West, when the Government decide to have a by-election, the electors will give them their answer. It will show that the electors are dissatisfied with the Government's actions, and with the Budget.
When I heard the statement by the Chancellor I began to wonder whether the Board of Trade had played any part


in the preparation of the Budget. Did the President have nothing to say? Did he make no representations at all? I speak from experience, because when I was at the Board of Trade the Department made a great impact on Treasury thinking. So far as I can see, there has been no such impact on this occasion. It was the Board of Trade which influenced the Labour Government in their control of investment policy; in the distribution of industry; in relation to building controls; the proper use of raw materials and long-term trade agreements.
It is as well to recall that it was this policy which took a bankrupt country, such as we were in 1945—we should remember that a quarter of our national wealth was destroyed by enemy action.

Mr. W. A. Wilkins: That was what was said by the right hon. Member for Woodford (Sir W. Churchill).

Mr. Bottomley: As my hon. Friend reminds me, the right hon. Member for Woodford (Sir W. Churchill) said that it was a bankrupt country. We had to sell overseas assets and we incurred more overseas debts. No honest person would deny that in 1945 the country faced economic difficulties greater than it has ever had to face since. And after five years of Labour rule what happened? Let me refresh the memories of hon. Gentlemen opposite. The whole of the national Press acclaimed the accomplishment of the Labour Government in bringing a bankrupt country back to a state in which the economy was flourishing—

Viscount Hinchingbrooke: But the boat went down again.

Mr. Bottomley: For various reasons, I will not quote the Daily Herald or Reynolds News. Let me quote the Daily Express of 25th May, 1950. This is what it said:
Biggest boom in Britain's history —never before have so many goods rolled off the production lines in the factories. Exports are up—never before have so many people been in work. Agriculture as well as industry shares in the bumper times—never before have wages been so high.
It is true—and here perhaps I can satisfy the noble Lord—that the boat did go

down. It went down because of circumstances over which the Labour Government of the day had no control—because of the Korean War. Tory Governments have never had to face a catastrophe of that kind in the whole of the past eleven years, yet there has been one economic crisis after another.
The reason that the Government are unable to adjust the economy and achieve prosperity is because they continue to believe in the blunt and brutal method of manipulating the Bank Rate, and it just will not do. The Chancellor claimed credit for a strong £. I do not give the right hon. and learned Gentleman much credit. One reason why the £ is strong is the presence of hot money in the country. Last month £72 million of hot money came in, but let us not forget that the money which has come in can just as speedily go out. If that happens we know, from what happened last July, what the result will be. Last July the disappearance of hot money resulted in the imposition of a 7 per cent. cent. Bank Rate, a wages pause and a rise in taxation. But still the Government persist in following this policy.

Sir E. Boyle: May I take the opportunity of welcoming back the right hon. Member for Middlesbrough, East (Mr. Bottomley) and also expressing the hope that he noticed that the Leader of the Opposition approved the sharp increase in the Bank Rate, as is reported in columns 1019–20 of the OFFICIAL REPORT of Monday, 9th April?

Mr. Bottomley: I think it a little unfair to take that extract from my right hon. Friend's speech out of its context. Had the Leader of the Opposition been faced with a situation such as was brought about by a Conservative Government, and had had to deal with it at that time, a sharp increase in the Bank Rate might have been the right method to adopt. But the policy of the Labour Government would result in a planned economy which would make a higher Bank Rate unnecessary.
If we are to overcome our economic ills, we must increase production. I am sure that the noble Lord the Member for Dorset, South will agree. I hope that he will listen to what I am saying because I am trying to get his support. He is an hon. Member with a reasonably independent mind and a good deal


of what I am going to say will, I think, command his support. I have taken the trouble to read his speeches, and they have not been very praiseworthy of the Government. I was going to say that to overcome our economic ills we must produce the right kind of goods which we can sell in the markets of the world. We must make sure that we export them to markets which will give us the greatest reward. This was the basis of the postwar recovery of this country which was brought about by the Labour Government, and I commend it to this Government.
Hon. Members opposite would also agree—it has been said by Government spokesmen—that we have to increase production to overcome our economic ills. This is what the Labour Government did from 1945 to 1951. The expansion of productive capacity was over 40 per cent. Hon. Members must have seen the United Nations Economic Commission for Europe Report which has been published. This is where the Government fails the nation. It is shown in the Report that in relation to six European countries the increase in production has been 7 per cent. or more, with an average increase of 4·5 per cent. The increase in production in this country, under a Conservative Government, has been 2 per cent. Are hon. Gentlemen who are concerned with production satisfied with that increase? I am sure that they are not. But they have not expressed themselves about it as strongly as have hon. Members on this side of the Committee. If they were concerned with national interests, and not selfish interests, they would be joining us in urging the Government to have a more expansive production programme.
I suggest that the Government do not know what to do. They call for expansion and then clap on hire-purchase restrictions or call for a credit squeeze. They stop the banks from lending the money required to modernise and re-equip industry. Then they damp down consumer demand, which does not help the economy. By damping down consumer demand we see what happened following the measures of last July. Since July the damping down of consumer demand has been followed by a fall in profits and an increase in unemployment. As a result, our exports

have suffered because the under employment of equipment and labour increased the costs per unit of output.
In my judgment Government policy was influenced far too much by speculators and foreign investors. The strength of the £ ought not to depend on what foreign investors do with their money. A strong £ should depend on increased production and a growing volume of exports. This is the only way in which we shall overcome our economic ills. The Budget does not begin to tackle these problems. I suggest to the Government that if they are really concerned with overcoming the country's economic ills they should exercise greater control over private investment as they would over public investment. Otherwise we shall find that too much of the country's resources are put into industries which cannot benefit the economic recovery of the country.
My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), in his admirable opening speech in the debate yesterday, called for working parties to see how industries could be planned. I go further and say that unless the Government are prepared to direct investment into the capital goods industries, into automation development, electronics, chemicals and the atomic energy industries, this country will no longer live as a great industrial country holding its own in the world. The Government ought to be giving some direction to industry, to say that the day of making consumer goods is nearly over and what we have to do is to supply the foreign producer who in turn will make his consumer goods. This kind of development is going on, but it is short-sighted to say that if we provide this kind of goods it is a once-for-all operation. There will be replacement and re-equipment. This is a potential market in which the pride of British industry can help to bring about our economic recovery and help in building up the standard of living of people in the less developed parts of the world.
There is also a greater need for more scientific industrial research. I admit that in agriculture with reference to the production of grain we have done well in mechanisation, but in the production of meat and feeding stuffs we have hardly touched the problem. We ought to be


concentrating on that in order to avoid excessive imports which add to our balance of payments problems. When we are compelled to import raw materials we should see how we can make them go further. A great deal is unnecessarily wasted. We have not given the encouragement to industrial and scientific research which is necessary if we are to build up a strong and powerful economy. The weakness of the British economy today—contrary to what hon. Members opposite have said—is not to be found among British workers, managers, scientists or technicians, but in the failure of the Government to direct investment to the right industries which could make the fullest possible use of the excellent qualities of those men and women.
It is the Government's duty to encourage the development of industry to make us more efficient in the production of the right kind of goods to send to the most profitable markets. It is useless to call on the nation to go on working harder at the wrong job. Call upon them to work hard but on the right kind of job, then we can succeed. The Financial Secretary has temporarily left the Front Bench. Obviously he has to go out at some time. I would say to him that if he thinks the economic problems will be solved by a wage pause that again is very weak thinking. I acknowledge right away that wage restraint in a planned economy might be necessary in the national interest, but wage restraint in a disintegrated and inefficient system only serves to encourage the continuation of inefficiency in industry. It is not wage increases which cause inflation, but a dreadfully wasteful uncoordinated system of private enterprise.
This I find in keeping with traditional Conservative policy. When it calls for sacrifice it goes to the section of the community which provides the skill, the thought and the labour. It is particularly generous to that section of society which owns wealth. I was very pleased to read in a Sunday newspaper a reference to a wealth tax. I happened to be very friendly with the late Professor Freddie Benham, whose death we lament. I remember that he was the initiator of this idea. The Sunday Observer paid tribute to that fact. He said, "Why you Parliamentarians don't do something about taxing wealth instead of putting

burdens on those who earn incomes, I can't understand". If there were a tax on wealth of 1 per cent. it is calculated that it would bring in £500 million. If we made the percentage higher and put it on £20,000, it would bring in much more. By that means the Chancellor could have got all the money he wanted without resorting to other methods of taxation.
Certainly there was no need to put the tax on sweets. We have heard an appeal made on behalf of children. This afternoon we heard a comment about a girl having chocolates, which was to the effect, "Why should the young man not pay a little extra for his young lady's chocolates?" I had this brought forcibly home to me in another direction as an indication of how hard this tax will bear on another section of the community. I have a dear old mother-in-law of 82. She is unfortunately blind and is an old-age pensioner. One of the few luxuries she is able to have is an occasional boiled sweet. I wish the Chancellor of the Exchequer could have heard what she had to say about this tax. It is unnecessary, mean and ought not to have been put on.
We cannot get this economy right unless we face the fact that capitalism is itself out of date. We have to change that society and substitute one in which the public good comes before private greed. We live under a lop-sided economy. A man who designs houses and the workers who build them and get comparatively small wages for doing so, pay taxes, yet the speculator who asks thousands of pounds for land and gets his price overnight pays no tax if he knows how to phase the transaction properly. Can we square those two things? To put it in another way, the stockbroker who sells steel shares will probably get more in commission on one transaction than the steel worker in my constituency who has spent a lifetime in the industry would get in one month.
Our standards have gone wrong. Commercial profit is not a test of true values. Priorities must be given to those things which give the people a good and secure standard of living and an opportunity of enjoying a richer and fuller life. Nothing in this Budget even begins to meet the challenge. If we are to succeed in expanding and improving our economy


it must be planned and worked for. Clearly this is something which this Government are not prepared to do. It is time they went.

5.48 p.m.

Mr. Maurice Macmillan: My first and very pleasing duty is to add my congratulations to the hon. Member for Pontefract (Mr. Harper). I do so with all the more pleasure as a Yorkshire Member. My constituency also makes sweets. I hope that Pontefract will soon emulate the export record of Halifax in that respect. There are several points one has in common with a fellow Yorkshire Member, but there is one big difference—among others—between us. I think that he is not likely to be unseated by Liberal intervention in his constituency.
I hope that the right hon. Member, whom we are all extremely pleased to see back in the House, now for Middlesbrough, East (Mr. Bottomley), will forgive me if I do not follow him into his excursions either into local unemployment in the north-east area, or into past history. His remarks seemed almost massively irrelevant to the present situation. He did as I fear so many right hon. and hon. Members opposite do, allowed nostalgia for past crusades to blind him to the necessities of the present situation.
I wish to add my congratulations to those offered by other hon. Members to my right hon. and learned Friend the Chancellor of the Exchequer. I hope that he will not think me churlish, in the circumstances, in complaining a little and to my great disappointment that nothing has been done for the small saver or investor. I had a flicker of hope when I heard mention of the Stamp Duty, but it died when this turned out to be merely a technical point, and once more we have nothing at all.
I take the point that has been made both inside and outside the Committee that, if what we really require is to help the small saver and investor, that also implies a rather more considerable reform of our tax structure. Perhaps it is not wise to contemplate such a reform until we know the result of either the success or the failure of our negotiations to enter the Common Market, since this must have a profound effect on the

whole future of our economy. Whatever the result may be, this will not be the same in the future. I hoped for something this year. Perhaps I may return to this later, if I am able to catch the Chairman's eye, when we discuss the Finance Bill. Meanwhile, I press the Chancellor to be firm in the reforms that he has hinted at.
I hope that my right hon. and learned Friend will take the pressure and my remarks this afternoon as evidence of the support that he is getting for his Budget. He has made a great start in trying to face the economic facts of life. There are two aspects of reality that concern us in this Committee. One is the effect of our economic pressures, fiscal and otherwise, internally on our own people, and the other is the external effect that these measures will have on the economic situation of the United Kingdom in the world.
Concerning the first, I would not go so far as the right hon. Gentleman the Leader of the Liberal Party in saying that there is no reward for enterprise in our economy. I think that the Financial Secretary refuted that this afternoon, certainly with regard to the distribution of income. I must admit that I am not so happy about the distribution of capital. I feel that we have still a long way to go before we treat the owner and the earner as fairly as we do the dealer and the speculator. I am not making moral judgments and I am not trying to say that certain methods of earning money are more or less disreputable or more or less useful to the community than others. I am merely saying that the burden of our tax system is unequal because it is not properly adjusted to the needs of a modern affluent society.
I think that there are many similar cases where that adjustment is not perfect. Subsidised houses do not always go to those who need them most. There is a difference in the labour market and in wage demands between those who have strong union representation and those who, for various reasons, are outside the unions' fold. I think that it is true to say that there is a slight tendency to shift towards a corporate State whereby those outside the corporations suffer compared with those who have the protection and force which they get from


them. I should like the Chancellor, in contemplating his reforms, to bear this in mind.
Unlike the hon. Member for Cardiff, South-East (Mr. Callaghan) and other hon. Members opposite, I think that it is quite wrong to discourage activities which are in themselves harmless or even helpful to the economy simply on the ground that they are open only to a few people. On that analogy, we would have discouraged motoring when it was the hobby of a very few rich people, and had it been stopped for that reason we should not have the great industry on which we depend so much today. I think that the same could be extended to other activities in the field of owning and earning. I should like to see the balance redressed, so far as it is necessary, by extending to the many the possibilities of saving, investing and owning shares which are now the perquisites of all too few.
On the other aspect of our economy—its impact and effect upon the British position in the world—I think that that reality is accepted with great reluctance by many people and that the economic facts of life are disliked by many, both managements and unions. The Financial Secretary refuted the argument again, as the Chancellor did before him, that industry has a right to complain that the Budget does not make things easier for them. It is quite clear, from the figures which have been given, that increasing demand is there without any Budget stimulation, and I think that we must admit that the ability of the Government to help industry in a free economy is not unlimited.
For example, there is the question of exports I do not believe that a great deal can be done by the Government to help the exporter. I agree with the right hon. Gentleman the Leader of the Liberal Party when he said—and, I think, proved by the figures that he gave yesterday—that import limitation is certainly not the answer to the problem. I would go so far as to say that any increased competition from imports from abroad is likely to more than offset the effect on our balance of payments.
I have been a little shaken about the possibilities of export incentives—not so much true incentives. I do not believe

that incentive can be given to organisations as opposed to individuals but in measures to counterbalance extra costs, but the effect might be limited. There are many fields in which no Government intervention can help. I will quote two examples in my own constituency, where machine tool exports to India are being limited by competition from the Iron Curtain countries working on bilateral and barter agreements. There is very little that the Board of Trade can do to help in those circumstances. Equally, very little can be done in the matter, which, again, affects my constituency, of the high and increasing tariffs that the Americans are putting on certain types of carpets.
Where the Government can help, and where there is a field open to them, I feel that in many cases the export market is not so difficult as is frequently contended. It is not always a matter of cost. Of course, we must agree with the figures in the O.E.C.D. document, which were frequently quoted this afternoon and yesterday. The thing that puzzles and worries me is why we do not export successfully in areas where we are fully competitive. I am inclined, in these circumstances, to favour the stick rather than the carrot, because that is probably the only way in which we shall achieve success, keeping the carrot for the problems of growth.
Hon. Members on both sides of the Committee have made great play with the O.E.C.D. Report. This year the Report will play a rôle which some document plays every year when the Budget is being debated, whether it is the National Institute Economic Review or whatever document is in fashion in any one year. However, I noticed that hon. Members who compared the British record unfavourably with that of E.E.C. countries always quoted averages. It was left to my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) to break it up by countries. My hon. Friend quoted from paragraph 21 of the Report, which mentions the pool of under-employed workers in agriculture which so many countries have but which we do not have.
I want to reinforce my hon. Friend's argument and mention a few figures which seem to me to be rather striking. They are taken from another O.E.C.D.


document, the Report on the Employment of Labour. In Germany, as well as the influx of several million refugees between 1950 and 1960, 1½ million workers left agriculture, compared with 200,000 in the United Kingdom. That enabled the German industrial labour force to increase by 29 per cent., while ours increased by only 9 per cent.
I cannot give the 1950–60 figures for France, because they are not in the document, but, from 1954 to 1960, 900,000 workers left French agriculture compared with 102,000 in this country. The French industrial labour force increased by 8 per cent. as a result, whereas the United Kingdom industrial force increased by only 5 per cent.
Finally, on the figures, I want to draw the Committee's attention to the percentages. In 1950, 24 per cent. of the German labour force was engaged in agriculture. In 1960, it was 14 per cent.—a drop of 10 per cent. In the United Kingdom, the drop was from 6 per cent. to 4 per cent., a drop of 2 per cent. In Belgium, which has exactly the same rate of growth as the United Kingdom, the drop was from 11 per cent. to 8 per cent. namely, 3 per cent. Again, taking the 1954–60 comparison, the agricultural labour force of the two countries with the highest rate of growth—Germany with 7½ per cent. and France with 4½ per cent.—decreased by 6 per cent. and 5 per cent. respectively. The agricultural labour force of the two countries with the lowest rate of growth—the United Kingdom and Belgium—decreased by 1 per cent. and 2 per cent.
This trend will continue, particularly as the Common Market grows, whether the United Kingdom is in or out. One of the main policies of the member countries of the Common Market is the reform of their agriculture—to close 5 million small farms and smallholdings in the course of the next period of agricultural adjustment, to increase the size of their holdings, and to remove people from the land to industry. That is part of their policy. This must put the other countries of Europe at a permanent competitive advantage in labour force.
The only way in which Her Majesty's Government could deal with that directive would be to create a similar situation artificially at home—in other words, to create unemployment. It would be

easy for us to get that rate of growth by creating a reserve of labour artificially which other countries have naturally. It is to the great credit of this Government that they have turned their back on that method. I do not think that they would have had the support of many Members on this side of the Committee if they had not. Certainly, for what it is worth, they would not have had mine.
Therefore, there is a conflict in some ways between our needs as a trading country and the demands made on us as a banking country. There is also a conflict between economic action and Budget legislation required by efficiency and that required by social justice. To resolve this conflict the Chancellor of the Exchequer, the Treasury, the Government, and, indeed, the whole of the House of Commons, must be prepared to face very considerable fiscal changes in the future.
For further evidence of this I quote the fourteenth issue of the National Institute Economic Review, issued in March, 1961. The Institute made it clear that, although the proportion of the gross national product taken in taxation is no more in the United Kingdom than it is in other European countries, the apparent burden in the form of a disincentive and a burden on the individual is, for some unaccountable reason, harsher. Our tax is at much the same level as that of the rest of Europe, but its incidence on the individual is harder. This is because of the fundamental maladjustment of our whole fiscal system to present-day needs.
I will give an example of this in terms of savings, investment and capital. I am not so rigidly opposed to the taxation of capital gains as many of my right hon. and hon. Friends, provided that such taxation is part of a much more considerable reform. I could not agree, for example, with the somewhat simplified version put forward by the right hon. Member for Middlesbrough, East. Nor could I possibly agree with the various contentions of hon. Members opposite that there is something wrong in capital gain. Major reform, including the abolition of Stamp Duty and the reduction of other forms of taxation, should be considered.
I should not like the Committee to think that I am in any way opposed to wealth or the creation of wealth. It has done the country as a whole a great deal of good in the past. One of the features I most dislike about our present system of taxing capital is the way in which it is taxed when it is passed on, even in an unrealised form, from one man to another—to his heir. I cannot understand why it is more acceptable to a Conservative, or, indeed, to anyone, to tax capital in this way than it is to tax realised capital gains at a non-penal rate to raise revenue. The two must be looked at together. There is no moral question in it.
I ask the Committee to consider the example of two admirable, useful and respectable members of society. The first provides out of his savings or some other means risk capital to put into somebody else's or his own business. In due course, after many years and perhaps after many ups and downs in the fortunes of the company in which he has invested, he decides to sell out. He can do so without making any contribution to the country's revenue. It is a tax-free gain.
The second citizen, who is equally admirable, does precisely the same, but in his own personal business. He invests in it, develops it and builds it up. Perhaps because he has a pride in it and a sense of continuity, he wishes to hand it on to his heirs. The poor fellow who inherits it has to find a large sum in cash to pay an almost penal inheritance duty. I cannot see the difference in principle which makes one acceptable to Tory theory and the other not.
I cannot understand why, when considering death duties, the assumption is apparently always made that money is inherited in the form of liquid assets. It is always taxed as such. Inherited cash, which can be split up and handed over to the tax gatherer, is very different from inherited wealth in the form of bricks and mortar, stocks, machinery, "know-how", and so on. There is a very strong case for a capital gains tax and death duties to be looked at together. Also, as a counterpart, I should like the Chancellor to continue with his methods of dealing with evasion of both those charges. In that context, I should like him to look at the possibility of what

might be called a countervailing aid to capital formation, as I think that it is necessary to take positive action to spread wealth more widely as well as taking restrictive action through such charges as death duties.
We got some figures yesterday about the ownership of wealth. It is very plausibly argued that part of the reason for the restriction of ownership of our industrial wealth to comparatively few hands is the high rate of taxation on big earners—indeed, on all earners. If he has started from nothing, it is very difficult nowadays for a man to build up enough capital to become an owner of property except in his own business—

Mr. J. T. Price: Developing that line of thought, is the hon. Member aware that one of our industrial magnates—he might, perhaps, more correctly be called a speculator—is reputed in his own lifetime to have amassed £50 million in speculative enterprise? I hesitate to mention the man by name, but hon. Members may know to whom I refer.

Mr. Macmillan: The hon. Gentleman is making my point for me. I say that it is fairly simple to do that in one's own business, but that it is not so easy to do it in someone else's business. It is exactly my point that the small businessman—or the big businessman—can build up his business and, in effect, make a tax-free saving because, in effect, the money invested in the business comes from reserves and earnings without, in the ordinary way, attracting the taxation of a commercial enterprise.
If the man sells out—and we do all we can to make it pay him to sell out—he then makes a gain which is, in effect, a tax-free saving. In addition to the suggestions I have already made, I hope that my right hon. and learned Friend will consider methods of enabling other people, such as the highly paid executive, who may be earning more than the businessman, but who still cannot save because of the high rate of taxation, to do the same.
When we turn to the small saver, we find, once again, that nothing has been done for him by successive Chancellors. I think that it was a Socialist Chancellor who invented the "top-hat pensions scheme," with all its iniquitous results


of bumping up the salaries of senior executives to excessive heights. Nobody has done anything to help the ordinary saver to acquire capital, and to become an investor in shares.
My hon. Friend the Member for Kidderminster (Mr. Nabarro) yesterday pointed out the need to increase savings, and small savings in particular, and said that he would like to increase the Income Tax rebates on the premiums on life policies. I should like to extend a tax privilege of that nature to other forms of what might be called contractual savings, and I hope that, even at this late stage it may be possible to get a few concessions from my right hon. and learned Friend when we deal with the Finance Bill.
The principle is the same. The needs and demands of the society that has emerged since the war are not the needs of pre-war days. Hon. Members opposite are wasting their fire, so to speak, in their attacks on the Government, because they are making them in a context that no longer exists. We have quite enough to do in the future. That fact is sometimes not recognised in our economic debates which, in some cases, show a remarkable agreement about ends but considerable differences of opinion about the means of achieving them. I would ask the Chancellor to bear that in mind when he is considering tax reforms and fiscal policy. There is a great deal he can do in other ways to help, but I will leave those to my hon. Friends.
I do not think that the Chancellor will have any success in trying to give an incentive to organisations. He must keep the carrot for individuals, but for the organisations he must use the stick. I wish that we could have a little more of both; a little more carrot for our people, and a little more toughness for our businesses.

6.15 p.m.

Mr. H. Rhodes: The hon. Member for Halifax, (Mr. M. Macmillan) has made a very good speech, and I should like to take up one or two of its points with him. I will deal with small savings later and will turn at once to his remarks about death duties and the effect of taxation on people with small to medium-sized

businesses. I say without fear of contradiction that it is not easy today to start a business in which one makes things, and establish it at the rate that is possible for someone establishing a business in terms of either property or spivvery. It is probably harder than ever before to start a business making things.
I agree that there are many firms in Yorkshire now that are anxious and nervous about what is to happen when they have to hand over businesses which have been carried on for many generations exporting to the most distant parts of the world; which have been the cornerstone of our export trade for donkeys years. I agree with the hon. Gentleman that there is a case for the examination of what happens to capital in the form of bricks and mortar, and the like, on the death of the owner.
I cannot join with the hon. Member in his praise of the Government for not creating unemployment. The Government are creating unemployment on a very vast scale, but there is an enormous difference between the unemployment being created by the Government at present and the unemployment that existed between the wars. Today, we pay the unemployed inside the factory for doing nothing waiting until the time comes when the economy is stimulated, to win an election, put up prices, and make a fortune in a boom.
I had hoped to see the President of the Board of Trade present today. I told him that I would refer to him, in order to give him an opportunity to correct something that he is reported in the OFFICIAL REPORT as having said yesterday. I want to know whether a mistake or a misprint has occurred because, if that is not the case, if this gets into the hands of the Japanese trade department, the right hon. Gentleman will be wasting the taxpayers' money in going to Japan at all. The right hon. Gentleman is reported as having said:
Although we recognise that these schemes of the Japanese are not contrary to any obligations to us, we hope that the Japanese will find it difficult to get rid of them even before 1964, when they are due to expire."—[OFFICIAL REPORT, 10th April, 1962; Vol. 657. c. 1182.]
As I say, I informed the right hon. Gentleman that I would raise this matter, and I hope that he will have


an opportunity to comment on it. He informed me that he had an important meeting to attend, but I hope that he will consider my question and, perhaps, have the matter altered in the OFFICIAL REPORT, because if it is not corrected he will be wasting his time in Japan.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd): I am sure that it must be a misprint.

Mr. Rhodes: I am sure that it must be, because I cannot remember hearing the right hon. Gentleman say that. I thank the President of the Board of Trade for the references he made to an industry with which I have been connected since I was 12 years old. The wool trade is exporting £160 million worth of goods per year and is still the second most important exporter to the North American continent. The industry is composed of many small firms which have the benefit of knowledge about exports accumulated from medieval times. We in the wool trade know how to export and when we speak we do not use any airy-fairy phrases like some people here do. It is our life-blood and we know what we are doing.
The President of the Board of Trade let it leak out yesterday that he intends to visit Japan during the Recess, and I should like to give him a little advice before he goes—just as a father would advise a lad who was setting off with his bag of samples to get a bit of business. I would like to give him this advice before he sets off for this land in which he will find the most charming hostesses and the most efficient and intelligent businessmen. The right hon. Gentleman is going as a young man to face the blandishments and temptations which are denied to people like myself because of our age. Thus I offer him one or two words of advice before he gets there.
I notice that the President of the Board of Trade has come into the Chamber. Perhaps he will now comment on whether his statement, as reported in the OFFICIAL REPORT, is correct. I refer to a passage in the speech he made yesterday in which he is reported as having said:
Although we recognise that these schemes of the Japanese are not contrary to any obligations to us, we hope that the Japanese will

find it difficult to get rid of them even before 1964, when they are due to expire."—[OFFICIAL REPORT. 10th April, 1962: Vol. 657. c. 1182.]

The President of the Board of Trade (Mr. F. J. Erroll): I am grateful to the hon. Gentleman for having raised this matter. It is an obvious misprint. For the word "difficult" read the word "possible"

Mr. Rhodes: Considering the hours we spend discussing whether it is right to add an "and" or an "or", the word the right hon. Gentleman has corrected is a very important one.
I can understand the Japanese wanting to negotiate a treaty very urgently, because if there is anything in the question of our going into the Common Market, the Japanese must get in under our coat tails if they are to be accepted in the Common Market. In Japan there are industries which are co-ordinated and planned to a degree about which we have no conception. Their close consultation between one industry and another and the building up of their needs in the investment field are probably unique in the world. They have a system of statistics which has been built up through earnings, stocks and the activities of businesses about which the rest of the world has little knowledge, unless that knowledge exists behind the iron curtain, which I know nothing about. They are very clever at this sort of thing, and, it is significant, they are aiming at doubling their income in ten years. Banking opinion in Japan informs us that personal savings amount to 15 or 16 per cent. of the gross national product. In Britain, on the other hand, we talk about our private investment in industry from all sources as being no more than that amount.
I will not weary the Committee by going through a catalogue, to show just how good they are. Japan is geared to a high interest rate in its daily business—an interest rate of between 9 and 10 per cent.—but the Japanese Government make it possible for an exporter to borrow money at 4 per cent. so that his pipeline for exports can last for six months before he needs to export. That is an incentive for which most manufacturers in this country would go on their bended knees.
But before the President of the Board of Trade goes to Japan and listens to the


little geisha girls, there is some other information I should like to give him. Although he said yesterday that we are aware of some of the incentives given to exporters in Japan, I take it that the right hon. Gentleman was referring to incentives of a tax nature. Japanese industrialists are able to discount their deals through an ordinary commercial bank which, in turn, are discounted by the Japanese National Bank at 2·55 per cent.
I urge hon. Members to contrast that with the high rate here. A Japanese industrialist's pre-shipment finance is catered for. All he need do is produce his export order book and he gets the necessary money on long-term credit—or up to 70 per cent. of the total at 4 per cent., irrespective of prevailing rates. Japan now has such control over its industries—through its own associations linked with the Government—that it can put a brake on production inside the country if it appears that production is out-running home demand. This means that the Japanese Government need simply say to a manufacturer, "If you export we will take off that liability. You can produce at the rate of 100 per cent. if you can export the goods."
When I think of the President of the Board of Trade going to Japan immediately after Easter and of the responsibilities he will carry with him—to see, at any rate, that the wool trade is not going into battle with its hands tied behind its back—I hope that he will remember the advice I am giving him.

Mr. Callaghan: The right hon. Gentleman should take my hon. Friend with him.

Mr. Rhodes: I wish he would. I am willing.
I want to refer briefly to an industry which the right hon. Gentleman did not praise so much—cotton. In answer to a Question yesterday by my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) about anxiety prevailing in Lancashire—I will not labour this, because it is not the time for it; there will be opportunities later on to bring this matter forward with more effect—the Parliamentary Secretary said:
The Government have repeatedly said that they consider that the restraint of imports of duty-free Commonwealth cloth will undoubtedly

be required for the whole period of the re-equipment and re-organisation of the Lancashire industry.
The hon. Gentleman then pointedly said to my hon. Friend:
The trouble is that the Lancashire industry has not yet fully digested those words."—[OFFICIAL REPORT, 10th April, 1962; Vol. 657. c. 1128.]
If there is any logic in the Parliamentary Secretary's reference to "the period of re-equipment and reorganisation, surely the basis must be the year when re-equipment and reorganisation were first mentioned, and that was 1958, when the imports from the Far East were running at £21·9 million. Last year it was £32·8 million. Which is the right hon. Gentleman taking as his basis—the year when it began, or 1961?
The Government ought to give a clear and unmistakable lead in what they want to do with a declining industry. If the Government vacillate over what to do, Ministers must not come to the Dispatch Box year after year mouthing eternal platitudes about stimulating this and holding back that. If, for instance, the President of the Board of Trade—I hope the right hon. Gentleman will listen to this, because I have phrased it as well as I can—were to demand and get from the trade an unequivocal guarantee, backed by agreement and performance, that the trade could and would be able to compete on level terms with the Continental countries, would he consider bringing the criterion for eastern imports to a realisable and equitable figure—for instance 1958 imports of eastern cloth?
That is all I have to say about the cotton trade. I now want to turn to what the right hon. Gentleman said about exports. He urged my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) to read the Forbes Report. He commended that Report to my hon. Friend and urged him to read it if he could spare the time. The Report is a thorough examination of the issues. I have done my homework on it, too. The Report says:
It seems to us that the general economic policy of the Government is the biggest single factor bearing on the export situation.
This is the Report which the right hon. Gentleman recommended.
The agitations for special incentives to export would lose much of their force if trade in general could be carried out in a climate where the conduct of commerce was less subject


to a high rate of taxation and especially in a form with an unfortunate and immediate impact on production costs. The recent heavy duty on heavy oil, to high interest rate and to constantly disturbing alterations of policy in regard to the extent of capital investment and the level of home demand. Each time the country runs into a balance of payments difficulty action is taken on the now familiar lines of protecting the pound sterling by measures designed to restrict internal investment upon consumption. These measures inevitably react to the detriment of exports by curtailing the necessary base of domestic trade and increase the cost of exports. We recognise that such steps may well have been inevitable in the circumstances, but we consider that the time is overdue to find some alternative approach to our chronic economic problems which will strike at the basic causes giving rise to them.
One of the basic causes was the hoax which the Conservative Party put over to the country in 1958–59 when they engineered the consumer goods boom in respect of which they are now reaping what they sowed.
One has to have a climate of opinion for exports. One cannot just turn round to people and say, "You must export now. You did not need to do so last year. Everything in the garden was lovely then". There must be a sense of national purpose and of patriotic focus in it whereby people are proud to export.
I was in Japan in 1947 when MacArthur was in charge. I remember Japanese girls and old men and women rubbing bits of rusty machinery with lumps of pumice stone to get them going again. My goodness, they have got them going again to some effect. I remember the first ship ever to sail out of Kobe carrying exports made of cotton which the Americans practically gave the Japanese because no other country in the world could use it. The dockers lined the quays and waved goodbye to that ship, as proud as anything, knowing full well that that ship and the ships which would follow would be their salvation economically.
What I have said about the Japanese and their practices does not make me admire them the less in terms of their ability to achieve a national focus and do a job. The Germans have done it, too. The French have done it, also, in recent years. What is the matter with us? Where is the lead coming from? Has it come from the Government? I cannot help thinking of the time that

we have spent in this House putting through legislation such as the Gaming and Lotteries Act. All over the place betting offices are now open so that people can spend more of their brass. There is hardly a block of buildings between Putney Bridge and Westminster Bridge that has not got its off-licence on the corner now. And then there is the bingo.

Mr. A. Wilkins: This is the moral standard.

Mr. Rhodes: This is the bingo Government.

Mr. Wilkins: It is a bingo economy.

Mr. Rhodes: It appears that the whole country is bemused by the idea of having a lucky strike on the Stock Exchange. If hon. Members need any confirmation that a vast proportion of the public are looking to a lucky strike on the Stock Exchange, they have only to read last night's newspapers.
They seek by the lotteries or by the pools to put themselves in Eldorado. This is the biggest disincentive to hard work the country has ever seen, and yet in the middle of this the President of the Board of Trade made a statement yesterday when my right hon. Friend the Member for Battersea, North (Mr. Jay) asked whether there was nothing wrong at all with the economy. The right hon. Gentleman replied:
There is nothing much wrong, except in the eyes of hon. Members opposite."—[OFFICIAL REPORT, 10th April, 1962; Vol. 657, c. 1189.]
What a weak and puerile rejoinder to an intervention by my right hon. Friend. It will not do to keep telling people that there is nothing much wrong with the economy and all we need to do is to balance our payments and as soon as we have done that we can sit back for another rest. It is not so.
Next, I come to investments, and I want to refer the President of the Board of Trade to what he said in column 1180 of HANSARD when he boasted about the amount of investment that has gone into British industry in the manufacturing section. Of course we put money in. It runs something like this—£800 million in 1958. £800 million in 1959 and then, as soon as the consumer boom comes along, it soars to £1,000 million in 1960, £1,200 million in 1961 and probably more in 1962.
Then about investment in stocks. Surely nobody ever starts to put in machinery unless he knows what his commitments are likely to be to clothe that machinery with raw material. One does not put a machine to work on a product unless one knows what it will cost in terms of raw material to clothe it. Has the right hon. Gentleman never read St. Luke? Was the man not adjured to sit down and find out how much his tower was going to cost before he started to build it? I say to the Financial Secretary that if a little arithmetic had been done on what it would cost in terms of raw materials to clothe the machinery, the hon. Gentleman would not have said at the Dispatch Box that he did not know or that it came as a surprise that stocks were building up in 1959–60.
May I draw the hon. Gentleman's attention to the bulletin issued, in the absence of anything better that the Government can do in terms of information, by the Federation of British Industries? The Federation has issued about 13 reports and in every one of them there is a reference to the building up of stocks throughout that time. I would agree with the Financial Secretary that the emphasis in terms of large stock-building does not come on until towards the end of 1959, but one would expect it with the mass of stimulation that came in the latter part of 1958 and, through the Budget, the decreases in Income Tax and the rest of the incentives just before the election. Members opposite must not protest. I have all the facts on how and when these things happened.
The interesting point about the investment programme is that we have not done anything with it. What on earth is the use of spending £4,000 million, as we have done over the last four to five years, to arrive in 1961 with a production which is less than it was in 1960? The thing is so absurd. The figure is one of 0·2 per cent. decline in 1961 over 1960 in the whole of manufacturing industry.
Last week when I was at home one of my oldest employees came to me and said, "I want to ask thee a question. How does it come about that more and more firms get machines when we are getting towards the top of the boom and

then they have to buy a bus to fetch labour from away and pay over the odds for the labour?" Does the Committee remember the articles in The Times at the turn of the year about the drift in the cost of labour? They were bang on the mark. But the Tories generated this stupid expansion in 1959. I keep returning to that, because the Government are not going to get away with this as they got away with Suez. This is something which they will have to hear about for all the time.
What on earth do the Government mean by encouraging that expansion of investment simply to come to the Dispatch Box and boast about how much has been spent? Did they not know that they could not obtain the labour for it? It comes out in each of these F.B.I. reports that when the boom gets on the go shortage of skilled labour causes the biggest handicap to production there is. Yet, at the same time, the Government have no real programme for putting into operation apprenticeship schemes so that the skilled labour will be coming along for the future. No, not they. It is estimated that if the full capacity of the engineering industry were to be used now it would take 300,000 pairs of hands to work it. Let the Government think of that and reflect upon the excess of investment which they have encouraged.
I should like to make some comment on the N.E.D.C. When the Chancellor, as reported in column 968 of HANSARD, was enumerating yesterday the sort of principles to which the N.E.D.C. would work, I do not for a moment think that he had any idea that he was going to hand over the running of the country to the N.E.D.C. We should be stupid if we thought that he meant that. I should like to put a point to the Financial Secretary about the N.E.D.C. so that, if he will, he can take it back to the Chancellor and when the right hon. and learned Gentleman comes to reply he can give me an answer. If he allows the Treasury to dictate to the N.E.D.C. it will mean failure for N.E.D.C. The Government must in no circumstances ginger the N.E.D.C. into getting going just to make something seem to be done or to do something to justify setting up that body.
It took many years before the French got their planning authority in train. Every time the French have come forward with a four-year plan—and they


have had three up to now—it has taken twelve months to prepare it. It will take time to prepare the groundwork, and to decide who will do what in the N.E.D.C. Anybody who is worth his salt in terms of fitness to go into the N.E.D.C. office is in industry or commerce and is almost indispensable there. I therefore wish the Government well in getting the right people to go into that office. The Government should not, for the sake of appearing to do something quickly, attempt to get quick and cheap results. I hope they will not be tempted to do that. Let them take their time and then they will build aright.
That is all I have got to say, and I expect that a lot of people will say it has been enough, and so do I, but I do say this, that I hope that in future years, in assessing the potential of this country, the Government will use the N.E.D.C. as an instrument for getting the sort of information which is being got in Japan at the present time, as it has been for the last five or six years, and will then plan investment, and accept for all time that a good deal of what we on this side of the Committee have been putting to the public about planning is good for the British economy.

6.41 p.m.

Mr. William Clark: I am sure that I shall be expressing the sentiment of every hon. Member in the Committee in saying that the hon. Member for Ashton-under-Lyne (Mr. Rhodes) gave us a very interesting and lively speech. He would not expect me to agree with all he said, but I think that there was a lot of sense in a lot of his speech, though he rather spoiled it when he injected the bingo element into it. I hope that he, and his hon. Friends who supported him when he made the reference to bingo, will make their voices heard in Transport House and stop the Labour Party from having a national lottery to further its fortunes.

Mr. Callaghan: This has nothing to do with Transport House. This is a venture by a local Labour party which is running it in exactly the same way as the Conservatives do.

Mr. A. Lewis: Only more successfully.

Mr. Clark: I accept the amendment by the hon. Member for Cardiff, South-

East (Mr. Callaghan), but I think that hon. Members opposite may take the principle of what I said.
To come to the Budget, while I generally welcome much of what is in it, there are many things I personally should have liked to have seen in it. I welcome the Schedule A proposals. Without rehashing the arguments against this iniquitous tax on a notional income which the Conservative Party, with unanimous acclamation, has for years asked the Government to do something about. I should like to deal with the counter arguments to abolition which the right hon. Member for East Stirlingshire (Mr. Woodburn) raised yesterday. He suggested that because Schedule A tax is to be abolished we should necessarily give rent allowances to the people living in rented accommodation.
There is a fallacy in that argument. It is based on the fact that if a man has a certain amount of money and puts it into bricks and mortar without paying Schedule A tax he is enjoying a tax-free income, but that if he puts the same amount of money into shares he pays tax on the dividends he receives; consequently, it is a taxed dividend for which he has to pay rent for the accommodation he must live in. This argument is a fallacy, because throughout our tax structure for many years—since the 1920s—it has been possible to invest one's capital in tax-free securities, namely, National Savings Certificates.
I have taken the trouble to work this out. We have talked about the man with £5,000 with which to buy a house or to invest in securities. The average price of houses is not £5,000. The Building Societies Association recently carried out a survey, and in the Home Counties which, I think hon. Members will agree, is the most expensive part of the country to live in, the average price of a house is £3,700. In the North, the average price of a house is about £2,500.
The building societies have a very true picture because they have all the information about house prices. The average price of a house is about £2,800, even today. A man with £2,800 to invest can buy a house, from which, according to Schedule A, there is a notional income; or he can invest in National Savings Certificates—indeed, just over £3,000—and still get interest tax-free.


In addition, he can invest £600 in the Post Office tax-free.
The argument that because Schedule A tax is abolished there should be a rent allowance because the man paying rent out of taxed income is being penalised is absolutely fallacious, and I hope that the Chancellor of the Exchequer will not retain Schedule A a little longer because of the arguments about rent allowance. I should like to see something definite in the Finance Bill about Schedule A. We have the undertaking that it will go. I should have thought that we could now say that from 6th April, 1963, 50 per cent. or 33⅓per cent. of the present net annual value on a Schedule A basis should be abolished. I am sure that hon. Members would wish to join with me in tabling an Amendment to the Finance Bill.

Mr. A. Lewis: And vote on it?

Mr. Clark: The Treasury say the abolition of Schedule A would cost about £50 million. I should like the Minister to say whether that £50 million takes account of the fact that a lot of Schedule A tax is cancelled because of the present payments on mortgage increase. If Schedule A is abolished mortgage interest by the house owner will presumably be allowed as other income is—for instance, Post Office Savings Bank interest is—and if it is set off against earned income the Revenue will recoup itself. I ask whether the £50 million takes account of the recouping of the Inland Revenue of the two-ninths loss on earned income relief.
In passing, I would say that I do not see why—apart from owner occupiers—the Inland Revenue continues to retain Schedule A. Renting property is like any other business. There are incomings and outgoings. I should have thought that the whole of Schedule A on rented property could quite easily come under Schedule E. I cannot see that any useful purpose is served by having two assessments for one property.
I was delighted to hear the speech of my hon. Friend the Member for Halifax (Mr. Maurice Macmillan), for I thought that my right hon. and learned Friend might have done something about savings. The Financial Secretary will remember that a few of us moved a new

Clause to last year's Finance Bill for ease of saving by using the P.A.Y.E. machinery. He will no doubt recall that in that debate, on 4th July, he gave us a fairly firm undertaking that the Chancellor of the Exchequer would carefully consider what could be done about it. One year has elapsed and nothing has happened about the ease with which one can save money. There is nothing in the Budget to give any incentive to the small saver.
One thing which worries me is that we have known that for some years there has been high consumer demand in the country. One of the troubles is that consumer demand has been so high—and it is expected to go up by 4 per cent. this year, which is about an extra £700 million to be spent. I should have thought that it would pay the Government to give a fiscal incentive to small savers. Some incentive is given to savers through the Post Office and Trustee Savings Banks, and so on. For the life of me I cannot see the difference between the saver who puts his money in the Post Office and the man who puts his money in unit trusts or some other form of saving. They are both equally valuable citizens, and if one gets an incentive of a £15 exemption I should have thought that it would have been fair to have given an incentive to the other one.
A lot has been said about the possible reasons for the success of Western Germany. Yesterday, my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) quoted from a document issued by the three banks in which there was an article dealing with the possible methods adopted by or the reasons for the success of Western Germany. One of these reasons—I think a valid one—is, they say, that savings in Germany are so high. I do not say that we in this country must always copy the Germans, but I think that we might emulate them here, because the West Germans have been extremely successful.
I am not suggesting that savings are the only reason why they have been successful, because, obviously, their new factories, and, incidentally, a new tax structure, have helped tremendously. I hope that during the passage of the Finance Bill my right hon. and learned Friend might accept an Amendment to give an incentive to the small saver. I


am firmly of the opinion, unlike one hon. Member on the benches opposite, that the capitialist system can work, is working and must continue to work. What we should do is to make more and more of our people capitalists, and particularly small people.
One thing which I was glad my right hon. and learned Friend referred to in his Budget speech was the accounting of the Revenue. For the life of me, I cannot see that all this business of above and below the line is necessary. We have things above the line which are supposed to be revenue; we have things below the line which are capital. Of the things above the line which are revenue, one of them—and it has been referred to previously—is Estate Duty. I should have thought that this duty, which, incidentally, is the only tax on capital which we have in this country at the moment, should be below the line. While I welcome the alleviation of some of the Estate Duty, such as the raising of the starting level, and so on, I still think that my right hon. and learned Friend must do something more about the duty.
There are two ways in which we can increase wealth. One is by adding to one's assets, and the other is by a reduction of one's liabilities, and both of these things achieve the same object. I should have thought that, in the case of Estate Duty—and I hope that my right hon. and learned Friend will at least consider this—many people who own gilt-edged securities have over the years seen a reduction in their value, for one reason or another. I am sure that the right hon. Gentleman opposite will not want me to argue this, but that we can accept it as a premise. I should have thought that some consideration could be given to the payment of Estate Duty by the redemption of gilt-edged securities.
At present, Estate Duty produces £260 million a year. I suggest that an estate might pay. shall we say, 10 per cent. of the duty liability by the surrender of gilt-edged securities at par. This, I think we would find, would reduce the National Debt. If we take 10 per cent. as the rate—and, obviously, all estates will not pay 10 per cent.—even at the best the cost to the taxpayer would be £26 million, but, in addition, we should be reducing the National Debt by a similar amount.
I should have thought that this would have an effect upon the market, I cannot see why we should not start reducing the National Debt in this way. One of the best ways to do this is through the one tax we now have which is of a capital nature.
The other thing which I am rather sorry that the Chancellor has not introduced in the Budget, though he may do it in succeeding Budgets, is an incentive for exports. Enough has been said about exports and the F.B.I. report, but there are many countries which are giving tax incentives or some sort of incentive for exports. I confess, unashamedly, that we should give incentives to exporters. Exhortation is all very well. Earlier, an hon. Member spoke of Japan lining up dockers and other people to wave out one of their export boats.
We have to remember the context in which these things have happened. Here was a defeated and humiliated nation trying to get on its feet again. We have not suffered that humiliation, and we have not had the same patriotic urge to do things similar to it. The same is true of Western Germany, which was crippled and brought to its knees. Every man—and this is only human nature—always works better or harder if he is suffering a disadvantage and is trying to better himself. We know for a fact, and several examples have already been given in this Committee and elsewhere, that our trading competitors—Western Germany, Italy, France and Japan—give incentives, some of them hidden. Some have been mentioned, such as the turnover tax which works to the advantage of the West Germans, the T.V.A., which works to the advantage of France, and, in the case of Japan, the differential in the Bank rate. In Italy. I understand, steel can be obtained at lower cost if it is for export.
This sort of hidden incentive is there. It is all very well for us to say that that is not the way we play the game. That is exactly what we say in the case of flag discrimination. We keep saying that we will not give incentives, though others do. We say that though these people are giving them, we will not do it, because it is not playing the game. I think that the Treasury could work out a method of giving a tax incentive to


exporters, because I do not think that exhortation is sufficient. Unlike my hon. Friend the Member for Halifax, I am sure that we have to dangle the carrot, and that, no matter what sphere or plane of society one is in, one must have an incentive.

Mr. A. Lewis: Is not the hon. Gentleman aware that the Chancellor of the Exchequer has said that one of the reasons why he had given away £86 million to Surtax payers was that an incentive was necessary to increase exports, and that now, on his own admission, it has not had the slightest effect? Will the hon. Gentleman now support us in saying that the £86 million should be given back to the old-age pensioners, or some other deserving section of the community?

Mr. Clark: I am grateful to the hon. Gentleman, but perhaps he will allow me to finish my speech. That is not the point I was on. I was dealing with incentives for exports.
Our exports amount to about £4,000 million a year, and I should have thought that the Treasury could work out a system by which, if we suppose that we gave a 1 per cent. rebate, the cost to the country would be £40 million. That is the size of the problem, and I do not think it is beyond the wit of the Treasury to work out a system. I cannot see why we, as a country, should always say, "Let other people do it; we do not play the game that way." They are taking away our export markets because of it.
I could wish that in this Budget, which I generally welcome, there had been a few of the things I have mentioned. I think that my right hon. and learned Friend the Chancellor, very courageously, and I congratulate him upon it, has grasped some of the nettles. He has admitted, I think in last year's Budget, that the Government are engaged on a three-year or four-year exercise, and, obviously, he cannot carry out very large changes in the tax structure in one or two Budgets.
The N.E.D.C. has been continually referred to, and I appreciate to the full that it is extremely important. I think that it will be an influential body, but

I do not think that we should overemphasise its importance. Everybody knows—and this is in no sense a party point against hon. Members opposite—that no amount of planning by itself will bring prosperity. I am sufficiently old-fashioned to realise that the only thing that will bring us true prosperity is hard work.

7.10 p.m.

Mr. Roy Jenkins: For the greater part of his speech, the hon. Member for Nottingham, South (Mr. W. Clark) was rather niggling in his approach to the Budget. His points might have been more fitting to a Finance Bill debate than of general economic interest. As, however, a rather niggling speech might be appropriate to this year's Budget, I do not complain too much. Also, I was inclined to agree with some of the general drift of the hon. Member's thoughts about tax incentives for exports if not with the way he put them, or with all his conclusions.
Before coming to my main points, I should like to comment upon the speech by the hon. Member for Halifax (Mr. Maurice Macmillan) and the interesting argument which he tried to deploy, in a serious way as he always does, about the relationship to an expanding industrial output of the reserves of labour in the countries of Europe which have done significantly better than we have in their economic growth in recent years.
There is, of course, something in that argument. There is no question that West Germany has gained very much from the flow of refugees from the East and has gained greatly by the recent injection of labour from Italy. I should not have much doubt that the next great spurt forward in West German industry will occur when the French eventually squeeze the highly inefficient German agriculture a good deal further and when labour is extruded in this way.
To try, however, to stretch the point sufficiently far to suggest that it is the main reason for the difference in the performance of ourselves and our neighbours would be to try to make too much of it. It is a point which may be valid in explaining away some of the difference in the growth of national production, but it is not in any way valid in trying to explain differences in the


growth of national productivity. The difference between us and our neighbours lies not only in production, but in productivity, in output per man, as recent years have strikingly emphasised.
The general reaction to the Budget outside political circles has been a sense of disappointment and anti-climax. The Financial Times this morning said that industry generally rather felt this and pointed out that the Chancellor had done nothing for exports, nothing for investment and nothing to reduce costs. It is the case that on each of these three extremely vital fronts, he could have done something without great difficulty. A reduction in the fuel oil tax stands out as an obvious way of trying to reduce industrial costs.
At a time when investment in private manufacturing industry shows every sign of tailing off, and may do so fast in the next six months, there was a great deal to be said for doing something either in the direction of investment allowances or increasing the depreciation provisions. And as the hon. Member for Nottingham, South suggested, one might well have considered at this stage special incentives for exports.
As I understood his speech this afternoon, the Financial Secretary to the Treasury gave the lines of the Government's reply to the accusation that the Budget is not stimulating in any of those senses. The Financial Secretary, incidentally, recalled that he had defended six Budgets since the war and said that this constituted a record for a Treasury Minister. I can say to him in complete honesty that in almost the whole of those six years the hon. Gentleman has put up the most lucid explanation and most persuasive defence of each of the Budgets which he has had to try to support.
They have been greatly varying Budgets. I remember the hon. Gentleman defending what now seems the almost Daltonian buoyancy of the Home Secretary's Budgets in 1953 and 1954, defending the Prime Minister's Budgets, defending the torpid complacency of Lord Amory's Budgets and now trying to defend the rather apprehensive restrictionism of the present Chancellor of the Exchequer.
Each year, however intractable the task with which the hon. Gentleman is

confronted, he comes out with a lucid, persuasive and extremely agreeable speech. On the first day, we wonder whether anyone can present the Budget less convincingly than the Chancellor of the Exchequer. On the second day, we hear the President of the Board of Trade and we realise that this is, indeed, possible. Then, on the third day, we hear the Financial Secretary to the Treasury, and things begin to improve, at least a little.
As I understood from the hon. Gentleman's able defence of the Government's policy, the Government say that in the economy, independently of anything that they do in the Budget, certain expansionary forces are at work. The main one of these, I understand, is the expected increase of 4 per cent. in personal consumption during the year which is now beginning.
The least lucid part of the Financial Secretary's speech today was his reply to a question which I put to him, when he did not totally explain what was in the Government's mind concerning a shift in the proportion of incomes which would be saved, whether this was done by hire-purchase commitments or in other ways. I wanted to know how we are to reconcile the expected 4 per cent. increase in consumption with a maximum rise of 2½ per cent. in personal incomes. This leaves a gap to be explained—not an impossible one—but one on which we should know the Government's thinking.
At any rate, there seems to be an element of speculative prediction about it. Who knows exactly what will happen to savings and what will happen to hire-purchase commitments when these fall in for renewal? It will depend upon the state of confidence of individuals whether there is a big increase in hire purchase.
Alongside the increase in consumption demand is the question of investment in private manufacturing industry. What happens there, which will have a substantial effect on the overall level of demand in the economy, will depend very much on the level of confidence in business. The Financial Secretary, who represents, as I do, a Birmingham constituency, will know that it has been frequently said recently, and is undoubtedly the case, that in the Midlands, which, in many ways, is still one of


our most prosperous areas, there is a feeling of uncertainty about the future and a lack of confidence among the business community which has not been seen since the war. Therefore, it would be rash to depend upon investment demand continuing too strongly.
That is the first part of the Government's case—that certain expansionary forces, independently of any stimulus given by the Budget—

Sir E. Boyle: The hon. Member has put a fair point about the gap between the Government's target for incomes and what my right hon. and learned Friend and I have said about spending. I mentioned that unemployment, although not really high, is about 2 per cent. If what my right hon. and learned Friend and I have said about economic expansion proves to be correct in terms of both home and export demand, it is quite possible that unemployment will fall and it is certainly likely that total employment will rise in the course of the year.
It has to be remembered that we are in a circumstance in which the number of school leavers, potential employees for industry, is bigger than in most years. Apart from what I said about hire purchase, that explains the gap between the Government's target for incomes and what happens to personal spending.

Mr. Jenkins: I thank the hon. Gentleman for providing that additional indication of the Government's thinking on this subject. I was putting in parenthesis the point about not being clear how the gap was to be explained, but what at the moment I am principally trying to see what is the Government's reply to the case that this is a Budget which does not stimulate the economy.
Further, as I understood the Financial Secretary the other point which the Government would make is that in so far as there is to be any additional stimulus to the economy, exports must lead the way. I think that the Financial Secretary went so far as to put it into precise terms, saying that the Government could not say anything else in view of what they had said about this last July and as the balance of payments position was not yet secure.
The Government are, of course, the prisoners of their own pronouncements

on this issue, but they cannot expect us. the country, or independent commentators, to be prisoners of their pronouncements, because we have never accepted the view, and rightly never accepted it. that the most likely way of dealing with balance of payments difficulties is by restriction rather than expansion. There is no evidence in the experience of recent years to suggest this.
From the point of view of our competitive position, which is obviously crucial to our balance of payments performance, production and labour costs in industry are overwhelmingly important, but that does not prove that the Government are right in their approach to this point. This statement, indeed, is so incontestable as to be a platitude. Nor do they prove their case by quoting from any document, the "favourite document of the year" as the hon. Member for Halifax called the O.E.C.D. report. It is true that by publishing economic reports at this time one catches the Budget market, as it were, and that if they do not have a heavy sale, at least they get a good deal of publicity in the House of Commons.
The O.E.C.D. report has achieved that this year. But quoting reports about production costs and labour costs does not settle the argument between the two sides of the Committee, because labour costs can be considered from two different points of view—one the level of wages and the other the level of productivity in industry. It is quite wrong to say that the answer is determined any more by one side than by the other.
One of the main differences between ourselves and our competitors in the past has not been that our wages have gone up faster than theirs, but that our productivity has risen more slowly. We should ask what the Government now mean when they say—and I do not quarrel with them about this—that the prospects for our exports are now quite good. If they mean that, for various reasons almost entirely outside our control, world demand for the sort of exports which we sell is likely to be more buoyant in the future than in the immediate past, I agree with them. In the short run our exports are likely to be floated up slightly higher on the top of a wave, but, equally, at some stage further on in the cycle, we shall


float down again to the extent that there is no real improvement in our competitive position.
In addition to this general movement, some improvement in our competitive position may come about not because of any improvement in our productivity, but entirely because the rates of wage increases of some of our main competitors have got out of hand in the last two years. But we should meditate about the rate of increase in wages amongst some of our main competitors constitutes wages required to put the situation out of hand. In Germany, such a rate would be 10 to 11 per cent. a year. So long as it was 6 per cent. a year, the German economy was perfectly all right.
Obsessed as he is with a rate of wage increase of sometimes 4 and sometimes 5 per cent. a year, I do not know what the Chancellor would say if he were confronted with a rate of increase of 10 to 11 per cent. The depressing thing is that there is no prospect at all of our competitive position improving and becoming permanently healthier as a result of an increase in productivity. The only hope is that our rate of wage increase should be temporarily lower than that of our competitors.
I do not want to enter another controversy which cuts across the two sides of the Committee, but we have heard a lot recently about the possibility that we might be undercut by our European neighbours. What is ironical is that the prospect of our improving our competitive position is now based upon our undercutting our European neighbours in the rate of wage increases and, therefore, the real rate of increase of our standard of living.
All this being so, I have no doubt that our balance of payments position will temporarily improve and no doubt that next year the Chancellor will produce a somewhat easier Budget. But I hope that I am not being excessively partisan or excessively suspicious when I ask whether, supposing that the balance of payments position does not improve, hon. Members on any side of the Committee believe that next year the Chancellor will again produce an equally austere Budget. That, to say the least, is unlikely.
One of the reasons why the Chancellor has been cautious and possibly excessively cautious this year is the same as why Lord Amory was excessively cautious in the spring of 1958. It is that no risk must be run, during the twelve to eighteen months before a General Election, of having to introduce restrictive measures. The expansionary measures are, therefore, introduced later than is really called for by the health of the economy. I have no doubt at all that between 1958 and 1959 we lost a year we could have expanded more safely in 1958 than in 1959.
From that point of view, the position is not quite so clear this time, but there is a strong danger of a repetition. It is becoming rather discreditable and extremely bad for the economy that our performance in this respect should be so dictated by electoral considerations and our periods of growth restricted to such a short time before elections. I said some years ago that from the point of view of the expansion of the economy one of the few things we have to be thankful for is that the Septennial Act was repealed in 1911, and that we do not still have seven years Parliaments. If we did the periods of growth of the British economy would be even more infrequent than they are now. [An HON. MEMBERS: "What about one-year Parliaments?"] Perhaps we ought to return to one of the old Chartist programmes.
I now turn to the speculative gains tax, as I suppose we should accurately describe it. There is not much dispute—certainly, nothing has been said by hon. Members opposite to contest this—that this proposal does not deal with the heart of the problem at all. It may squeeze out a little short-term speculation, but there is no doubt that the relief of the City at the limited scope of the tax is the best and almost complete answer to those who deny that this is a caricature of what a real capital gains tax should be. It leaves almost untouched the sense of unfairness throughout the community which is associated with the present exemption of capital profits.
Let us consider the scope of the problem. It is worth recalling the opening sentences of that part of the minority Report of the 1955 Royal Commission


on the Taxation of Profits and Income, which dealt with this subject. It said:
The basic reason for the inclusion of capital gains in taxation is that capital gains increase a person's taxable capacity by increasing his power to spend or save; since capital gains are not distributed among the different members of the tax paying community in fair proportion to their taxable incomes but are concentrated in the hands of property owners (and particularly the owners of equity shares) their exclusion from the scope of taxation constitutes a serious discrimination in tax treatment in favour of a particular class of taxpayer.
Does the Chancellor seriously believe that his proposals end that discrimination? I cannot conceive that he does; but if he does, why does he say, in effect, that he is expecting hardly any yield from this tax? Everybody knows that capital gains are a substantial element of spending power among one part of the community and a tax which hits that section really hard would produce not an enormous but a quite substantial yield.
I have two strong objections to this proposal in the form in which it is presented. First, it is a repetition in microcosm of the whole of our taxation system. In other words, there is a high nominal rate of tax—I think that for a real capital gains tax the rates of tax are too high; I would not make capital gains subject to Surtax—we have high nominal rates of tax made almost totally ineffective by the fact that nobody will pay them. It is like the Surtax system itself and it is extremely undesirable to extend this natural weakness of the tax system to a new field.
There is also the danger that by introducing a measure in this emasculated and ineffective form what the Chancellor is doing—but which, I hope, is not what he intends to do—is discrediting the whole idea of a capital gains tax by introducing something which is not a capital gains tax but by hoping that people will believe that it is such a tax and that it produces a minute yield.
One of the disadvantages of the Chancellor is that he is likely to be remembered as a great discreditor of useful and reputable economic weapons. There is a great deal to be said for a properly conceived and applied payroll tax—not exactly a payroll tax, but some form of tax on the employment of labour. The Chancellor introduced last year an ill-considered, half-baked scheme. He

had it on the Statute Book for a year and he has now scrapped it with hardly an apology. He thus discredits a useful economic weapon, and I hope that he will not do the same with this idea of a speculative gains tax or a capital gains tax.

Mr. W. R. Rees-Davies: I want to get a clear picture of what the hon. Gentleman is putting forward. Is he advocating that the capital gains tax should be applied in the full sense of the word, that it should apply not only to stocks and shares, but to landed property, to pictures, to moveable goods, furniture, and so on. on which capital profits are made? And, in advancing that and saying that it should not cover Surtax, is he suggesting that everything by way of profit, whether income or capital, should be deemed to be income for this purpose?

Mr. Jenkins: I was leaving the capital gains tax because I wanted to be brief.
My view about this is that the distinction between short-term and long-term gains is artificial, and is an invitation not to pay the tax. There would be a great deal to be said for applying a real capital gains tax to all capital profits, except on the sale of individual houses, but I think that, in practice, this might be impracticable, and as the core of the problem is certainly associated with equity shares on the one hand and real estate on the other, and as one can never have a tax system which is theoretically perfect, I would be satisfied, for practical purposes, to confine it to those two main forms of capital gains. I agree that this is not theoretically perfect, but this is something which one must be prepared to accept.
I turn, as my last point, to the general question of growth in the economy. I was surprised when the Financial Secretary, commenting on the speech of the Leader of the Liberal Party, who said that the Government did not give adequate priority to growth, quoted the opening sentence of the White Paper, Incomes Policy: The Next Step, in which there was a rather elliptical reference to growth, as though, because this came in the opening sentence, it indicated that the Government gave it first priority. I think that this point was either meaningless, or marked a sharp change in Government policy. I suspect, though this


does not apply to most of the remarks of the Financial Secretary, that it was in the first category. It does not mean very much. The fact that it was mentioned was lip-service, and does not indicate a change in the Government's order of priorities.
It is worth recalling that Lord Amory, speaking in another place, after he had ceased to be Chancellor of the Exchequer, when he could look back on his three-year period with perhaps more freedom and frankness than he could here, gave a clear indication of what had been the Government's attitude to economic growth during his period at the Treasury. He made it quite clear that, so far from giving growth first priority, the Government gave it fourth priority. He listed three points which were more important, and said that if after these and as well as these we could get a good rate of economic growth, well and good.
Has there, or has there not, been a change of policy? I ask that because I am sure that until there is a change in the priority accorded to growth we will not achieve the dynamism in our economy for which we have been looking for a very long time.

Mr. Harold Davies: It is important that we get an answer to this question.

Mr. Jenkins: I would have suspected that the general reaction to the Budget was not so much complaint about this or that taxation proposal—though a lot of them are almost indefensible and certainly undesirable—but a feeling that it would not matter so much what the individual taxation proposals were provided there was a general sense of economic purpose behind them; a feeling that the Government were trying to get the country out of its economic difficulties and giving a lead. There is no indication of this at all in the Budget.
The Financial Secretary this afternoon talked about the 1960s, and tried to look ahead. I am sure that he knows, and we all know, that if we are to remain anything like a Great Power and if we are to remain an effective competitor an the first league of manufacturing countries, we cannot possibly afford to let the 1960s to be a decade like the 1950s, and particularly the second half. There must be a drastic change in the

performance of this country, and there is no indication in the Budget that the Government are capable of giving a lead in this direction. The Budget is presumably the Chancellor's exposition of his economic policy for the coming year. Either it ought to be used for putting forward plans for the coming year, or it ought to be dethroned from its false prestige as a major national annual statement. If this is a major statement of intention for the coming year, it is a very dismal proceeding.
We must give effective purpose and a sense of direction to the economy, and this must be done by some form of real, purposive. I do not believe in a highly restrictive form of planning. I do not think that we can, or need to, return to import controls. I think that some of the planning measures which were suitable in the days of the Labour Government at a time of raw materials shortage would not be suitable or desirable now, but I am sure that the Government must take the responsibility for working out not only how we should expand the whole economy, but how individuals should grow, dovetailing their plans with each other. And they should then be enforced by a mixture of incentives and penalties. Unless this is done, we will not get out of this rut. It can be done, but whether it can be done by the present Government I am doubtful, and if it cannot, the country certainly cannot afford to have them much longer in office.

7.38 p.m.

Mr. Nicholas Ridley: The Committee always enjoys listening to the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), and I am no exception. Tonight he made a clear speech, and I agreed with the bulk of what he said. We understand that he has to put in some bits of good Socialism to help his case with his own side, but I think that he went too far when he said that electoral considerations had been allowed to influence the Government's policy in regard to the economy.
I think that the hon. Gentleman gives the Government too much credit when he says that they are able to manage the British economy to the extent that it would be necessary to do this. If he


could manage the economy to this extent we should not need to have periods of stop and go. We should be able to go smoothly along at the pace we wished.
During my speech I shall mention many of the points which the hon. Member touched on, because mine will be on very much the same theme as his. I start by welcoming my right hon. and learned Friend's Budget. Its great virtue is that it is balanced and contains no suggestion that we are trying to relax too early. I know that some uncertainty is felt in the business world and that a certain amount of criticism of the Budget has been expressed by the employers, but that is not a bad thing. There is no holy alliance between the Conservative Party and the employers, and it is a good thing that we should occasionally demonstrate that it is up to them to do something and that they should not always come running to the Government for help.
Now is the time for them to help themselves, when we have created conditions which make it possible for them to sell their goods throughout the world. As the hon. Member for Stechford said, we have a competitive advantage. We have, a fairly stable position, both economically and politically, and if the employers are worth anything they will make the best of the present situation.
So far the theme of the debate has been that our economy has grown only at a very slow rate—only 2 per cent. in the last two years. Indeed, last year our productivity was static, and the year before that it fell a little. We have grown only at the rate at which we have been able to find fresh labour to come into the working population. This has been particularly true of the last two years. We have had the school leavers, Commonwealth immigrants and others coming from abroad, and the redistribution of labour from one industry to another. It seems to me as if the birthrate is becoming more important than Bank Rate for the national growth.
Contrary to the opinion expressed by the hon. Member for Stechford, I am in no doubt that the only reason—or by far the greatest reason—why German, French, and Italian production and productivity has grown has been that they

have had vast resources of fresh labour coming on to their markets. Not only does more labour enable production to increase; the fact that more labour is wanting to come in causes what is known as a pool of unemployment, and causes labour rates to be within the capacity of the nation to pay.

Mr. Roy Jenkins: In that case, I wonder why the hon. Member voted for the Commonwealth Immigrants Bill—as I assume he did.

Mr. Ridley: I was going to mention that. I will do so now, in answer to the hon. Member's point. I believe that it is necessary to limit the number of people coming into the country according to the number of houses and to the available resources in health and education. Having supported that Measure, however, I plead with the Government to administer it wisely. They have power to fix a limit, and I hope they will fix the highest limit they dare, in order to make sure that we do not cut off supplies of labour.
The main reason why European productivity has risen is that extra supplies of labour have been available. It is very significant that within six months of the erection of the Berlin Wall and the closing of the frontier between East and West Berlin the West Germans are already having to face the very problem with which we have been grappling for so many years. But the West Germans are green and new at it, and they will probably fare much worse than we have.

Mr. Jay: Does the hon. Member draw the inference from that that if the Commonwealth Immigrants Bill comes into force our rate of growth will become even slower than before?

Mr. Ridley: I have just made a plea for the wise administration of this Measure. I see no reason why the supply of people from the Commonwealth should be restricted at all at present. Restrictions should be applied only if they become necessary.
I was hoping to give some explanation of the way in which Britain can achieve a better rate of growth. I am sure that all hon. Members agree that immigration on a vast scale is out for this country, because we do not have a sufficient number of houses for it, or the


land on which to build them. Our society does not want to grow simply by doubling the population very quickly.
Much has been said about the mobility of labour and distributing it to industries which require it. I am not ashamed to repeat some of these things, because I am convinced that the only way in which we can augment our labour force is by adopting a positive policy on the mobility of labour. Paragraph 21 of the O.E.C.D. report clearly condemns our progress in this aspect of the matter. Although the distribution of industry is of the greatest importance on one side of the bargain, we must also bring in measures to stimulate migration from place to place, and industry to industry, and to help those who have the courage to move. We could help with house-moving expenses, and could do much more in retraining and in providing Ministry of Labour services to tell people where other jobs can be found. We could also do much to remove the limitation imposed by the apprenticeship rules of many industries, which prevents the increase of skilled labour which is so important.
I have great sympathy with the idea put forward by my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) that we should increase unemployment benefit, at any rate in the first few weeks of unemployment, so that unemployed persons could feel more security in having to miss a few weeks' work in order to look for new jobs. I, too, am a supporter of the pay-roll tax, and I shall refer to that later in greater detail.
All these factors are marginal and do not represent the biggest considerations before us. The real problem is the lack of growth of our economy. On many occasions hon. Members on this side of the Committee have tried out a policy of restriction, when money incomes were held down within the rate of increase of production. This has resulted in little or no growth. On the other hand, the moment that restrictions are eased we have inflation and a crisis in our balance of payments. It is not good enough for hon. Members opposite merely to advocate a policy of reflation, and the removal of all restrictions, and to say that expansion will cure all our problems. All our experience is to the contrary.

The removal of restrictions has meant an immediate increase in money taken out of the market, which should have gone towards the growth of the economy.
I congratulate my right hon. and learned Friend on his courage and foresight in introducing the pay pause. It has been remarkably successful. It has achieved its temporary object, but only at the cost of restricting the growth of our economy. If there had not been heavy credit restrictions and, therefore, idle capacity, we would not have achieved success with the pay pause. It is sad to think that a civilised economy like ours has to reduce its production in order to keep its money income within reasonable bounds in 1962.
Many more people are beginning to ask why the Bank Rate should be used for this purpose. It must be used occasionally. There are times when our foreign reserves need a boost by way of the Bank Rate in order to attract money, and there are other times when our economy needs to be restricted by means of the Bank Rate. It cannot always be true, however, that at the time when we need to attract foreign money in order to bolster up our reserves we must restrict home manufacture. This is one of the few mattters on which I agree with my hon. Friend the Member for Louth (Sir C. Osborne). This is a slight anomaly which requires further thought.
The Leader of the Opposition took the view that we shall not achieve wage restraint in a period of expansion unless the whole nation believes that the actions of the Government are completely fair. If the nation thinks everything is fair, he believes that everybody will cooperate and not press wage claims or take any more by way of dividends. I think that wishful thinking. It is like expecting that Mr. Clore will not charge for the rooms in the hotel which he is building in Park Lane and which I am told will be called "Cloridges". I do not believe that there is the slightest chance of obtaining co-operation from people just by hope and exhortation and believing that one is being fair.
I wish to ask hon. Members opposite this question. I hope that they will answer it in a sincere and not in a partisan way. If the Government were to


abolish the Surtax concession during this budgetary period, do hon. Members opposite really think that we should have full expansion and not have inflation as well? I believe that if they think out the question they will realise that the answer is. "No." The Government must have an incomes policy. I believe it is vital to this country that an incomes policy is hammered out and made to work. That is more important than anything else which we may discuss today. By an income policy I mean the incomes of everyone, of every section of the community.
The initiative of the Chancellor in at least getting the nation talking about this and imposing the pay pause, and now the creation of the National Economic Development Council, are developments of the greatest importance. I should like my right hon. and learned Friend to keep the Bank Rate for the bolstering up of our resources at a time when that is needed. Of course, the Bank Rate will have to rise and fall to a certain extent. But I should like the operation of the Bank Rate to be regarded primarily as something to be used in respect of foreign exchange. I should like the Chancellor to look after the question of demand and always balance his Budget as he has done on this occasion, because the moment a Government spend more than they can get from the people they start to create an inflationary situation. That is borne out by the content of paragraph 26 of the O.E.C.D. report which recognises that though demand is important there are other factors at work; and in no way should too much stress be laid upon it when discussing the question of inflation.
I should like to give my right hon. and learned Friend a few ideas about how he can develop his incomes policy, because I believe that to be the most important matter of all. I should like him to know that I approve of his speculative gains tax. His experience with the legislation which will go through the House this summer will perhaps enable him to develop this and to think of more ways of trying to bring this sort of gambling speculation within the tax collector's net. I should like my right hon. and learned Friend to continue his drive against expenses. I am one who feels sufficiently strongly about this matter to believe

that nearly all business expenses in this country—in it as opposed to beyond it—could be abolished altogether. I believe that the time to have dons this was when Surtax concessions were made. It would have been a perfectly fair quid pro quo to have said, "You will have no more expenses but we will give you back some of your own money to pay for the necessary items." I do not believe that it is too late for a drive against expenses, which make complete nonsense of the whole system of Income Tax.

Mr. Awbery: How can the hon. Member reconcile giving £83 million to Surtax payers and imposing a wage pause on the lower-paid workers in the country? How can he expect to gain the confidence of those people, who are the only people who can increase production and help us to prosperity?

Mr. Ridley: I believe this to be the third time that that interjection has been made in various speeches by the hon. Member for Bristol, Central (Mr. Awbery). I will give him my answer, but I am wondering whether he has been listening to what I have been saying. It seems clear to me—this is my own opinion—that the Surtax concession should have been balanced by a much harder and tougher drive against business expenses. We might even have made a profit for the taxpayer had the operation been carried out properly.
Finally, I come to dividends. I do not wish to talk at length about dividends, but I should like to quote two figures in order to keep this matter in perspective. They were given by the Treasury in a Parliamentary Answer a few weeks ago. Since 1938, in real terms, wages have increased by 71 per cent. and dividends have increased by 2 per cent. I am not saying that dividends have been unfairly treated. But I think that the position is put into the right perspective by those figures and I hope that we shall hear less—

Mr. A. Lewis: Will the hon. Member give the Committee the source of his information about those figures?

Mr. Ridley: It is in a Parliamentary Question. I have not with me the exact OFFICIAL REPORT column number, but I will tell you afterwards.

The Temporary Chairman (Mr. Malcolm MacPherson): Order. I think that the hon. Member is the third hon. Member since I have occupied the Chair who has used the second person pronoun when apparently referring to another hon. Member. One does not like to be finicky about these things when occupying the Chair, but I think that the practice of the House and the Committee should be observed.

Mr. Ridley: I apologise, Mr. MacPherson. I shall be more careful in the future.
How are we to develop this incomes policy? I think that every pressure must be exerted against speculative gains, expenses and suchlike abuses. I should like to see an end to the system of Whitley Councils and Burnham Committees. Hon. Members opposite have said frequently that we have destroyed these institutions. Whether that is so or not, I think that we should do so. I do not think that we should arbitrate against the taxpayer. The Government are responsible for fixing the wages paid through the councils, and the Government should take the responsibility.
Secondly, I believe it necessary ultimately to take control of the wages and salaries paid in the nationalised industries. We cannot in any sense influence these things. Most of the nationalised industries are either monopolies or are heavily in debt to the taxpayers. There are no economic forces, no bankers, no shareholders' meetings, no effect of the pay pause or credit squeeze or any restriction imposed, and there is no means of influencing the decisions of the nationalised boards. In pursuing an incomes policy I believe it necessary for the Government to take this unpopular step.
There is, lastly, the private sector of industry, which is the fourth group. The dividend drawers and city people comprise the first group. The second group contains the public service. The third group is the nationalised industries, and by far the biggest and most important is the fourth group comprising the private sector of industry. It is probably true that when an inflationary wage is given or a restrictive practice is allowed, either by employers or employees, or anything bad happens in industry, it is always the fault of the employers. I

believe that the way to influence not only wages—that is one aspect of the problem—but restrictive practices, productivity and all aspects of bad management is to have some stick with which to beat the employers.
To insist on good management is something which I think that the Government will have to do, and a payroll tax is necessary in this regard. My right hon. and learned Friend has already said that he proposes to reorganise the whole of company taxation and perhaps combine Income Tax and Profits Tax. Let him think carefully of what other elements he should build into this new tax. The turnover tax in Germany is going out of favour and it is not much in favour with me. But let him at least fill in a payroll tax which, if I had my way, would be an extremely heavy one.
This tax should be a regulator in the sense that it could be varied at different times from the Budget. I think it should be more discriminatory still in that it should apply with different ferocity and severity to differing industries. I do not think it beyond the wit of man to devise a means of classifying, say, six, eight or ten main groups of people in the country. By having a variable element in company taxation it could be imposed at different times on those people and we could probably achieve many of the objects we want. When there is an inflationary wage settlement pending, the tax could be threatened to be put on, or when there is a really inefficient industry which deserves some pressure to be put on it, this weapon could be used. When the two sides of an industry will not get together to talk about a restrictive practice or to see how to improve labour relations this sort of weapon could be used. The hoarding of labour, inflationary wage settlements, excessive profits, excessive dividends, all these things could be influenced by such means.
I have been trying to suggest some ways in which we could put teeth into the Government's incomes policy. With all the good will and all the best offices of N.E.D.C., with all the clear lead and courage of the Chancellor, I believe that he needs more weapons at his disposal and more teeth for his policy. These are only suggestions I have made to him. Do not let him be frightened if during


the next year he thinks of anything which may be unpopular but which would help him to control this vital element in our economy which so far we have failed to control—money incomes. Let him use taxation imaginatively, not as a dead load, but as something which he can produce to help and guide the economy as a whole. With that, I think we can have optimism for the future.

8.2 p.m.

Mr. Edward Milne: Much as I am tempted, I do not intend to follow the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) in many of the points he made, but there is one which I think worthy of reference. That was his suggestion of attracting people from areas of over-employment to areas where there is a superabundance of jobs.
I would have thought that in a party which is now gradually beginning to be won over slightly to the idea of planning the hon. Member would have seen the wisdom of attracting industries to an area rather than taking people away from districts to the over-crowded Midlands and the Metropolis. As the hon. Member himself has some considerable contact with the North-East, I should have thought that his sympathies in this matter would have been considerably stronger than he indicated in his speech. If there is one thing which the Budget has failed to do it is to grapple with the problem of areas of unemployment. The complete failure of the Government over the last ten years to deal with the situation is now reflected in those areas.

Mr. Ridley: I said in my speech that we should have a very good and strong distribution of industry policy, but that we should couple that with a policy for increasing the mobility of labour as a whole. Does the hon. Member not agree with that? Does he think that everyone should be encouraged to sit still and wait for a job to come to him?

Mr. Awbery: Send the jobs to them.

Mr. Milne: The hon. Member must often have listened to debates and should know that it has never been suggested by myself or my hon. Friends that the question of mobility of labour, if desired, should be so restricted, but

availability of jobs is more important than mobility of labour. Although anyone is allowed to move from one part of Britain to another, everyone has the equal right to expect that the area in which he resides and desires to work should be capable of providing employment for him. That is the whole answer to the question of developing industries in Britain. What is the use of talking about expansion if we already have the means of expansion within areas and the Government have not the courage nor the initiative to use it?
One of the features of this year's Budget debate, as of the last, has been the number of hon. Members whom we see only on the occasion of Budget debates. We wonder who they are. They flit into the Chamber, make their speeches, and then disappear. They manage to bring in all their pet theories which relate to other subjects which many of us have sought, even in the early hours of the morning, to bring before the House. It would add greatly to the value of our debates if we could have greater regularity in this matter.

Mr. A. Lewis: May I raise a point of order with you, Sir Norman, on this matter? I think that you were busy for the moment when this was raised. It has been a custom, has it not, for the Chair to state that when it calls hon. Members to take part in a debate it is expected that they will at least wait to hear one or two of the following speeches? Have you noticed that almost consistently now through all the big debates, particularly this Budget debate—this happens on both sides—an hon. Member is called, makes his speech, and then walks out of the Chamber? Is there any way in which you could inform hon. Members that it is at least a custom and a courtesy to stay and listen to the debate?

The Temporary Chairman (Sir Norman Hulbert): That is not a point of order.

Mr. Wilkins: Can you tell us, Sir Norman, how we can effectively raise this matter? I have sat in the Committee for the whole of three days and watched hon. Members come and go. This applies to both sides. I am sure that there is sympathy among hon. Members opposite with this complaint.


I have watched hon. Members come in and make their speeches, hon. Members whom I have not seen for three months, yet we who sit here for three days do not get an opportunity of putting constituency cases. There should be an opportunity to raise this matter effectively with the powers that be.

The Temporary Chairman: As the hon. Member knows, the Chair has no power to compel hon. Members to be in the Chamber. The only thing that he could do would be to put down a Motion.

Sir E. Boyle: I think that I may say that I am reasonably good at listening to debates. I simply intervene now to say that I think that there is something in the point which has been raised. It applies to both sides of the Committee. It is a convention—not a rule. Since the point has been raised, I should rather like to associate myself with it.

Mr. A. Lewis: While we appreciate what you have said, Sir Norman, and would not want to put down a Motion reflecting on the Chair—for we accept that the Chair always does its utmost to call hon. Members fairly and properly—what some hon. Members sometimes resent is other hon. Members, who attend probably only once in three or four months, having a word with the Chair, then going out again, coming back, staying for about ten minutes, being called, and then making their speeches. After they have made their speeches, they immediately walk out. Yet, another hon. Member, who may have been sitting here for three or four days, does not get into the debate.
I raise this matter because I am not interested in taking part in the debate. I ask whether or not something could be done through the usual channels to say that the Chair feels that the custom of staying and listening at least to some of the debate should be observed.

The Temporary Chairman: I quite accept that the hon. Member is not casting any reflection on the Chair. He and other hon. Members, including the Minister, have brought this matter to the attention of the Committee. That may well have some effect, but it is not a matter for the Chair at the moment.

Mr. Wilkins: Further to the observations which have been made, may I call attention to page 446 of Erskine May, where there are some Rulings on this matter? It says:
On 26 February 1872, observations were made concerning a supposed 'Speaker's List' by which his choice was governed. Such a list, however, was disclaimed by the Speaker himself, and Mr. Gladstone on behalf of himself and the Secretary to the Treasury.
It says in the last paragraph on that page:
It is now the practice for Members who wish to speak in a particular debate to submit their names in advance to the Speaker. This practice, while not fettering the discretion of the Speaker"—
Mark that. Sir Norman—
affords to Members who avail themselves of it a better opportunity of 'catching the Speaker's eye!'
My submission is that it ought to be within the discretion of whoever is the occupant of the Chair to take particular note of hon. Members who remain in the Committee.

The Temporary Chairman: Order. If the hon. Member pursued that line he would be making reflections on the Chair. The hon. Member for West Ham, North (Mr. A. Lewis), I understood, raised solely the matter of an hon. Member who has made a speech and immediately leaves the Chamber. That is not a matter for the Chair.

Mr. Milne: I did not realise, when I was making my observations on the habits of hon. Members during the debate, how deep was the resentment felt at the kind of action that I have mentioned. I am grateful to the Financial Secretary to the Treasury, who, if I may say so, sets an extremely good example in this matter. I also pay my compliments to the Minister of Health for the painstaking way in which he listened recently to the long-drawn-out debate on nurses' salaries. That merely underlines the fact that if Front Bench speakers on both sides are willing to pay attention to the debates, we, as back benchers, have a responsibility to keep in touch with the movement of events in the House of Commons.
To return to the Budget and its effects, I spent yesterday in my constituency, where I have fairly close contact with people and know something of what they are thinking about the Budget. Last


night, I attended a meeting of the Women's Federation. There were about 250 women there. They were typical of the womenfolk in the constituency that I represent. They are the womenfolk of miners, dockers and shipyard workers, the people who produce the real wealth of the community.
The hon. Member for Cirencester and Tewkesbury talked about the courage of the Chancellor of the Exchequer in his attitude to the pay pause during the year. What sort of courage is it that applies a pay pause to people who are producing the things that the nation requires, both at home and abroad, when one picks up one's evening newspaper, as I did last night, or this morning's newspapers, and finds that the I.C.I. directors have dispersed among themselves an annual sum averaging £23,000?

Mr. A. Lewis: Plus expenses.

Mr. Milne: I do not know whether Dr. Beeching adds that to his railway salary, or what is the particular set-up in relation to this, but how can one honestly admire the Chancellor for courage in the pay pause situation when one finds that this sort of rot has set in in the community?
I should like to look at two of the proposals in the Budget which, I think, need to be closely examined by the Committee. The first is the imposition of the tax on sweets, which has been consistently supported by hon. Members opposite. Two of the main arguments put forward in favour of it have been the fact that this is a contribution to the good, and especially dental, health of the younger generation in the years that lie ahead—that the Government are really doing people a good turn by making it a little more difficult for them to buy those things which to some extent, undoubtedly, cause dental harm. The President of the Board of Trade, whom I am sorry not to see in his place, considered that the tax was being correctly imposed because teen-agers in Britain were wallowing in wealth.
On the question of the teen-agers wallowing in wealth, the President of the Board of Trade ought to have a word with his colleague the Minister of Labour. He should look at the wage rates paid to the teen-age workers under

the various wage agreements. He should look at the take-home pay of many of the teen-agers working in hospitals, sanatoria and other institutions. He should take a look at this supposedly affluent teen-age society and the money that it is earning. If the health of these young people were the real factor in introducing this type of tax, why has the Chancellor been so niggardly in his approach to the Wolfenden proposals on sport?
After all, he will draw from the tax on sweets about £50 million. The Wolfenden Report on Sport and the Community was exceedingly modest. It asked for £5 million for a sports development council and £5 million to be spent by local authorities. Surely, if we intend to look after the health of the teenagers and burden them to the extent of £50 million, the recreational facilities that are to be unleashed by the Wolfenden proposals ought to be considerably increased. On this question of health the position of the Council for Physical Education and other bodies ought also to be seriously looked at.
As to Purchase Tax, I think that the Chancellor failed to grasp the nettle in his Budget speech. He made certain readjustments which, in my view, seemed to be more related to easing the position of a Britain that was intending to enter the Common Market than to the requirements and needs of the people of Britain at present. If we intend to do something about Purchase Tax and propose to decide the priorities as to what things are to go into the 45 per cent. category, the 25 per cent. category, and so on, it would be much more equitable to divide our Purchase Tax goods into luxury and non-luxury elements. We on this side have always argued that Purchase Tax is in itself a tax on the lower income groups and bears most heavily upon them.
On the morning of the Budget one London evening newspaper published a picture of a rather harassed-looking Chancellor of the Exchequer, bearing a Dispatch Box, and running through a long dark tunnel. The long dark tunnel is what we are discussing in the Budget debate. We are not discussing the effects of twelve months of the Government's actions on the people of Britain. We are discussing the effects of ten years


of Tory rule—the same platitudes and the same arguments. As one of my hon. Friends has said, the Financial Secretary has had the very unsavoury task of defending Chancellors of the Exchequer over the last six years.
Therefore we wonder, as we are entitled to do, where we came from and where we are going. People often tell us that we should not look too far into the past. I want to quote from the speech of the then Chancellor of the Exchequer, the present Home Secretary, in the second Budget of this Conservative Government following their return to power in 1951. He said:
When I opened my first Budget some 13 months ago, I began, as is customary, with a review of the previous year. The account I gave was as objective as I could make it and was inevitably a bleak one, a story of mounting deficits overseas and of inflation at home. The difference today is very striking."—[OFFICIAL REPORT, 14th April, 1953; Vol. 514. c. 33.]
We were told that we were on the road to recovery and that we were beginning to get to the stage where everything in the garden would be lovely. We were told that we should treble our standard of living in a very short time.
I do not want to weary the House by reciting the Budget speeches of the last ten years, but we should not forget that one Chancellor of the Exchequer, possibly the one most responsible for our position today, was the present Prime Minister, who, in much more flowery phrases than the present Home Secretary, as one would imagine, finished his Budget speech in 1956 by stating:
The rate of our progress during recent years has made it necessary to slacken the pace a little, but the great forward march goes on."—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 888–9.]
It is worth reflecting that this Chancellor of the Exchequer lasted only one year. It is a great pity that his tenure of office as Prime Minister has not been equally short. If it had been, the country would have been in a happier state today. However, the sands are running out and we can clearly see from those Budget speeches and from the attitude of the right hon. Member for Monmouth (Mr. Thorneycroft), Lord Amory and others that there was a practice of looking back on the year which they were reviewing as one of considerable progress and portraying the year which lay

ahead as one in which the people could look forward to the Tory promises of 1950 and 1951 being brought to fruition.
Lord Amory said this in 1959, after saying that the cost of living had been virtually stable for almost a year:
I hope that all concerned will realise what an exceptional opportunity we now have to keep it so."—[OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 46.]
In 1960, it was on the same lines.
So we get the list of the last ten years, leading up to the Budget speech on Monday—Butler, Macmillan, Thorneycroft—

The Temporary Chairman: Order, order. It is out of order to refer to right hon. and hon. Members by name.

Mr. Milne: I apologise, Sir Norman.
The right hon. Members who occupied the post of Chancellor of the Exchequer in the years I have mentioned can be referred to, I hope, within the rules of procedure of the House of Commons as the guilty men of a lost decade. They are now, as recent by-elections have shown, on their way out. Very soon the Front Bench opposite will be occupied by other Members with different views. The damage they have done to Britain will take a considerable time to repair, but I am convinced that in the second half of the twentieth century the repair will be carried out and that we can move forward to a day when we live not only in a better Britain but in a brighter world as well.

8.25 p.m.

Mr. John Tilney: I hope that the hon. Member for Blyth (Mr. Milne) will forgive me if I do not follow him in his historical researches. I am much more interested in the future and in how this country's economy will burgeon. I welcome the Budget, because I believe that it buttresses an already strengthened £. We depend primarily on the £ to buy the food we eat and the raw materials our factories consume. I welcome the Budget for the added confidence that it has given our currency and for showing that our party is a national party and not a party of one class.
It is indeed a forward-looking Budget in many ways, though I must confess that I have some sympathy with hon.


Members on both sides who have expressed a little alarm about our exports and our ability to compete in very difficult international markets. I have experience of a number of boards of medium size and small companies on Merseyside and also in other parts of the country. I regret to say that many of them consider exports as almost the residual legatee of their job and not the priority. If the policy of the Labour Party of so-called financial expansion were followed rather than semi-restrictionism, I cannot see that these companies would do anything more than they have done up to the present to sell their goods in the export market rather than at home. I am convinced that in the end we shall have to come back to some form of incentives for exports, but that is in the future.
I had better declare my interest as a member of long standing of the Liverpool Stock Exchange. Perhaps it ought to be a lack of interest in the speculative gains tax. However, before I deal with that, I want to make one or two minor points. I welcome very much what my right hon. and learned Friend said about Schedule A. I have never paid Schedule A. Possibly that has been due to six outbreaks of dry rot in my house. I believe that if owner-occupiers would keep proper accounts and receipts hardly any of them ever need now pay Schedule A.
As a Merseyside Member of Parliament I also very much welcome the capital allowances for shipping being moved forward by one year. This is worth £3 million this year and £2 million next year. This is not very much in the general context of the grave difficulties facing some shipping firms, but at least it is a step in the right direction until world trade is again moving into a period of major expansion.
Having campaigned for a long time for pensioners of the ex-Colonial Service, I also welcome the relief to those on small fixed incomes. There are many who have been forced to retire by their employing Governments much earlier than 60, or through ill-health because they have lived their working lives before the days of Mepacrine and refrigerators in climates highly unsuitable in many cases to Europeans. Many

of them find it very difficult at the age of 55 to get new jobs. I believe that among the 100,000 elderly people who are now to be exempt from Income Tax, and the 170,000 more who qualify for relief, there will be found many ex-members of Her Majesty's Overseas Civil Service. I hope that my right hon. and learned Friend will not take that as meaning that I do not think that Her Majesty's Government ought not ultimately to do something about them.
I also welcome putting into Estate Duty category all land overseas, be it mortgages or be it houses. I have never understood why investment in landed property overseas should not be counted as an asset of a deceased person. No doubt property in the Bahamas, in Bermuda or even in Jersey will now fall in value. Personally, I should have liked to have seen some of the money invested in overseas countries in the past put into our own agriculture or industry.
I do not believe that absentee landlords, whether in Ireland in the last century or in Nassau in this century, are very good for the landlord or for out economy. If it is to be said that some families have put large sums of money into developing our erstwhile Empire, in Kenya or Rhodesia—and, undoubtedly, many have done a fine job in so using their capital—I ask why the people in those countries should not go into partnership, establish a land holding company, and float it on their local stock exchange. It is important for the development of our way of life that there should be new stock exchanges in some of the smaller African and Asian countries if they are to accept our mixed economy. The Nigerians have been sensible enough to establish one in Lagos.
Speaking on business expenses, my right hon. and learned Friend said:
Action was taken last year to tighten up the tax treatment of motor cars used by business and professional people.
Of course, what he did resulted in almost the minimum of Rolls-Royce and Bentley cars being sold in this country, with no great increase in their sales abroad, and the danger of those businesses being closed down altogether. The Chancellor went on to say:
The revised and more detailed form for employers to fill up … has been sent out. and I shall consider the whole matter further in the light of the information that emerges from the returns in this new form."—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 984.]


I hope that my right hon. and learned Friend will remember what our competitors do. One sees, especially in Europe, buyers from developing countries being feted, wined and dined, all on expenses. That may be immoral and utterly wrong in the perfect State, but it is reality, and if it is not allowed for in this country, our potential overseas buyers will go to Europe. I hope that the Chancellor will bear that in mind. We have to look forward on every facet of our economy.
I come now to the speculative gains tax. In Liverpool, there are two commodity exchanges whose international glamour has no doubt been tarnished; some people might say that those institutions are almost atrophied. I do not want that to happen to the Stock Exchange. London has been, and is today, a great financial centre, and nothing should be done to weaken it. Why is it a great financial centre? It has been built on the financial, and particularly on the industrial, strength of Great Britain in the past.
I am, indeed, alarmed to see that Western Germany, which now has an hourly earnings rate for industrial workers higher than that of the United Kingdom has a production slightly higher than ours, and reserves very much greater than ours—

Notice taken that 40 Members were not present:

Committee counted, and, 40 Members being present—

Mr. Tilney: I was saying that nothing should be done to weaken our industrial or financial strength, and I believe that the Chancellor's Budget has had the avoidance of that as its main end.
I also welcome the fact that both sides of industry are getting together in the National Economic Development Council. I do not think that that would have happened had my right hon. and learned Friend not agreed some months ago to put forward something of the nature of this speculative gains tax. Personally, as a broker, I have always been subject to such a tax, and I should not have objected to a larger capital gains tax because I have seen so much money made by people who have not contributed as much to the country's economy as I should have liked to have seen. Admittedly,

they have produced risk capital, and risk capital can be lost as well as augmented—something that the Opposition seem unable to understand. That can happen even in the days of inflation.
I was much surprised by what the Leader of the Opposition said on 9th April, and what he said has today been repeated in other words by the right hon. Member for Battersea, North (Mr. Jay).
The real grievance is not simply that people make short-term capital gains, but that year by year those who own securities, in the main, so long as they are reasonably well invested, even without any special knowledge, can count on something like a 10 per cent. appreciation per annum.…They have only to look at the rise in share values to see that it is so."—[OFFICIAL REPORT, 9th April, 1962; Vol. 657. c. 1016.]
The right hon. Member for Battersea, North spoke today about windfall profits, but let us look at what has happened to some of the main industrial companies in the last nine months. P and O were as high as 48s. 9d. per share in 1961. They are now 18s. 6d. British Oxygen went up to 28s. 9d. in 1961 and are now 16s. 3d. South Durham Steel, which this party arranged to sell at 27s. 6d., to the grave objection of hon. Gentlemen opposite, admittedly went as high as 61s. 9d. in 1960, but are now 16s. 3d. Imperial Tobacco were 72s. 6d. in 1961 but are now 50s. 6d.
If the Leader of the Opposition will suggest that I have selected particular companies, I urge him to look at the Financial Times index of equities, which the Opposition are so frequently talking about and which quotes the overall average of the best companies. It touched 365·7 on 15th May, 1961, but now, after the boom that the Opposition talk so much about, it is only 306·6—some windfall.
I believe in a property-owning democracy, and I want to see long-term investment and not short-term speculative gains. I would have been prepared to support my right hon. and learned Friend had he put into the schedule of speculative gains such things as pictures, chattels, or motor cars. I regret, to some extent, that losses cannot be offset against other income in the same way as farm losses. I do not quite see the difference between farming losses and speculative gains losses or profits.
I must say a word about the speculator and the stag. I am told that this so-called stag, often without too much to back him, applies for a new issue hoping to sell what he gets at a profit. It has been said that this peculiar character broadens the market, so making it more active and more ebullient. I think that, on the whole, the stags have done a useful job. They have certainly made it slightly cheaper for industries to raise capital, but it would be dangerous to base a market on people whose finances are so slender that they must sell within a few weeks or a month or two and who must make a quick profit.
I doubt whether the speculative gains tax will make a great difference to the market. It may contract a little. It may be slightly more expensive to raise capital for industry. It is marginally deflationary and at the present time it is not a bad thing at all.
But how do our costs, as a financial centre—which is a facet of the problem on which my hon. Friend the Member for Torquay (Mr. F. M. Bennett) touched in his speech yesterday—compare in labour hours with other exchanges, either in Europe or America? I believe that our whole system of transfer, of capital and of stocks and shares, is completely out of date. Sooner or later Britain will have to go over to the American system of scrip and no par value shares. I hope that my right hon. and learned Friend will consider this when he is thinking about the new corporation tax, for I would like to see a slightly higher corporation tax and the tax on stocks and shares being bought and sold eliminated altogether.
Can my right hon. and learned Friend consider if the jobbing system, which was very good in the nineteenth century, will be equally, as good in the twenty-first century? Ultimately we must have a national stock exchange. Speaking as a member of a provincial exchange, the present ones are, I feel, rather like someone below the salt proposing the toast at some feudal banquet. This is a matter not only for the councils of the London and Provincial Stock Exchanges. It is a national matter. We believe in a capitalist economy. It may be mixed to some extent, but it is fundamentally

a capitalist economy, and we must see that our capitalist economy works.
Unlike hon. Gentlemen opposite, I happen to believe in the capitalist system, and I want to ensure that the methods that we shall use in the coming century will be the best. It is just possible that the methods which have been solidified since the time when we were the greatest industrial producer and the greatest creditor in the world may need some reform. They may not be ideal. For instance, I do not think we are using our clerical labour in anything like the right way. I am told that many firms in America do vastly greater business in finance with far fewer employees, and that is something which we should consider. The world has shrunk, and we must keep up with the Europeans and the Americans.
I strongly suggest that a Royal Commission or other body should be set up to look into the whole process of Stamp Duty, the way we sell our property and how our various exchanges are conducted.

Mr. David Webster: I must declare an interest as a provincial broker. Is it not a fact that at a time when our invisible exports have decreased very considerably, one of the encouraging signs, as shown by the White Paper on balance of payments, is the increasing investment in this country? Does that not give considerable emphasis and importance to what my hon. Friend is saying?

Mr. Tilney: I entirely agree with my hon. Friend. I hope that the Western world will get more and more mixed up together, but to get the benefits of that we must be, and must be seen to be, as economically efficient for capital as any of our competitors.
I feel that the Chancellor still has little room for manœuvre and still has balance of payments fears in the background. In this connection there is something which I have never understood. We can invest in American stocks. Purchase of those stocks means that ultimately either dollars or gold have to be produced by the Bank of England. I am told that since the war we have built up some of our investments in America virtually to the level at which they were before the war. We


have to deposit those securities; for ourselves, for clients, for trusts or for whover it may be, in a recognised depository. Yet the value of those securities is never shown in our national balance sheet, and that is what I do not understand. I believe that if they could be valued and properly shown, in our returns our reserves might well mount up to the level of those of, say, western Germany.
I welcome the Budget. I believe it will produce sound and not hot-house growth in our mixed and largely capitalist economy. I believe that the Budget has prepared the soil well and that the Chancellor of the Exchequer is a good gardener.

8.49 p.m.

Mr. W. A. Wilkins: Might I first say, Sir Norman, that during the observations that I made a few moments ago I was in no way casting any reflection upon you in the Chair or, indeed, upon the Chairman of Ways and Means. I merely hoped that we were focusing attention on something which I know is a source of great grievance to a great many hon. Members on both sides of the House.
I suppose that many hon. Members, particularly on this side of the Committee, who have sat here during the whole of the three days' debate on the Budget might almost begin to wonder what on earth had happened when listening to speeches from the Government benches. It seems almost incredible—hon. Members opposite themselves do not seem to believe it—that the Conservative Party has been in power for eleven years. Hon. Members opposite hail as a challenge now the necessity for the country to do something to pull itself out of the economic troubles into which they have landed it.
It is a fantastic idea on the part of hon. Members opposite that this has only just happened, that something has come about so that they find themselves in great economic trouble, and that they must now not only appeal to the nation to help them out but put a squeeze on the hardest hit section of our people in order to counter the inflationary tendencies for which the Conservative Party is responsible.
This is all the more noticeable, because I have a very clear recollection of the 1951 election. The slogan of the Tory Party at that time was that the people of Britain could no longer afford to be landed into a continuing inflationary price spiral and that we must call a halt to it. The only way to do that was to call them back into power, and since they have been in power we have had a long succession of inflationary crises which I honestly told people I did not think they could avoid. The only difference is that they blamed us for it when we were landed in the same inflationary trouble during our time in office.
After having sat almost entirely throughout the three days of this debate I have become almost like a piece of blotting paper, completely absorbed with the arguments, and particularly the economic arguments advanced. [An HON. MEMBER: "Saturated".] Not quite saturated, but almost so. Those of us who heard the admirable speech of our colleague my hon. Friend the Member for Pontefract (Mr. Harper) will recall that he used a term in the course of his interesting and humorous maiden speech to the effect that his impression of the sittings during the Budget debate was that we were being blinded with science and that all we were hearing were economic arguments and that figures were being juggled with and we were all in a maze.
I have some regret about the trend of the debate that we have had on the Budget. We have had two economic debates since the Christmas Recess, and yet almost the whole time of this debate has been devoted by both sides of the Committee to economic arguments rather than to the direct effects of the Budget on ordinary people. I felt that I almost had to apologise for breaking into a debate of this kind to talk about the Chancellor himself and his Budget. Up to the time when my right hon. Friend the Member for Middlesbrough, East (Mr. Bottomley), who was returned to the House recently at a by-election, spoke in the debate, the only forthright attack made upon the Budget and the Chancellor came from my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), in the excellent speech which he made yesterday, and from my right hon. Friend the Leader of the Opposition.
It is perfectly true that there have been two speeches today which have been concentrated largely upon an attack on the Budget. I confess to disappointment in not having had the opportunity to follow in the debate the hon. Member for Somerset, North (Mr. Leather), who was fortunate enough to be the first backbench speaker called following the two speeches from the Front Benches on Monday, and whom we have not seen since. This is the complaint we have, and the same might be said of the hon. Member for Ilford, South (Mr. Cooper), on whose speech I also want to comment, who probably was the second hon. Member to be called on the opposite side of the Committee after the hon. Member for Somerset, North.
These two gentlemen run true to form every year, with every Budget. They stand up—and perhaps this may be one of the reasons why they are in the "favoured nation clause"—and they cannot find enough congratulatory terms to shower upon their Chancellor of the Exchequer, whoever he may be; and on this occasion they even decided to say that the Chancellor had been courageous. I would tell the Chief Secretary to the Treasury and the Financial Secretary that the hon. Member for Somerset, North, who is very well known to me, will probably ride two horses. Those of us who represent Bristol or places in the vicinity of Bristol know quite well that the hon. Member consistently in speeches locally and in articles to the local Press has been telling us over a very long time—although, of course, he does not tell the Chancellor of the Exchequer, even when he gets the opportunity to do so—how the Chancellor could take 1s. in the £ off the Income Tax. Yet here, when he has all the opportunity in the world to give this advice to the Chancellor of the Exchequer, he simply fails to do it. Instead he comes here and butters up the Chancellor and tells him he is extremely courageous because he is putting 3d. on ice-cream—which is what I believe the ice-cream manufacturers are saying they will charge.

Mr. A. Lewis: Is my hon. Friend aware that the hon. Member for Kidderminster (Mr. Nabarro) on "Any Questions

"—for which he gets paid—also makes the same sort of suggestion?

Mr. Awbery: Kidding the Minister.

Mr. Wilkins: Anyhow, the hon. Member for Ilford, South and the hon. Member for Somerset, North tell the Chancellor how courageous he has been. I want to ask whether there is one single proposal in this Budget which could truthfully be described as courageous. If there is I will willingly sit down and let the Financial Secretary, or the Chief Secretary for that matter, tell me which of these proposals in the Budget he considers to be courageous. Is it courageous that he has taxed the kiddies' sweets? Is it? Is it courageous that he has reduced the tax on motor cars—by £40 in some cases—on the lower-priced motor cars?
He told us that the revenue he would raise by taxing the sweets, the ice cream and the soft drinks and things of that kind would be £30 million in this year and £50 million in a full year, but what he did not tell us, of course, was what the loss to the Exchequer would be by the reduction of tax on motor cars, refrigerators, and the like. It would have been a very interesting comparison we could have made, if the Chancellor had given us figures to compare what he is giving to the motorists to buy new motor cars by a reduction in Purchase Tax with what he is taking back from the children through the tax being placed upon their sweets. He said:
The revenue in this financial year from these changed rates will be £576 million instead of £585 million"—
that is, £9 million difference—
which would have been the figure if I had simply retained the 10 per cent. surcharge for the whole year."—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 992.]
So, according to his own figures, the Chancellor is giving up £9 million as a result of all this juggling with these figures, and I suppose that we may deduce from that that he is successfully robbing Peter in order to pay Paul.
One of the things which more than anything else has baffled me about this Budget is the amount of time and effort spent in juggling with the figures to achieve practically no change at the end of the day. I understand that Budget preparations begin some three months before the Budget is presented, and what baffles me is that so much time and


ingenuity and genius, not only of the Chancellor, or the Financial Secretary, or even of the Chief Secretary, but of many civil servants in the Treasury, are utilised for so long a period in juggling with figures in such a way that at the end of the day there is, practically speaking, no change in the income to the Revenue from taxation. This is surely a complete and absolute waste of time. What an example to set for industry—to utilise our resources in this way simply for changing the figures around and keeping things the same as they were before.
There is only one redeeming feature in this Budget, because I do not regard the so-called promise about the abolition of Schedule A as anything for which we ought to be grateful at this time. I had a very strong feeling myself, when I read the words of the Chancellor again, that this may not happen, unless, of course, we are able to get back into power ourselves next year, when it probably—in fact, I am certain—will happen. The Chancellor is not promising to abolish Schedule A, if one reads his words carefully. He has only said that he will think about it next year, giving the impression that the Government will do something about it. The only redeeming feature of the Budget is the raising of the exemption limit to old people over 65 years of age, and I am sure that everyone will welcome this, even though it is the only crumb of comfort one can find in what is otherwise, in my judgment, an extremely mean Budget.
I suppose it had to be this way, because otherwise the Chancellor and the Government would not be in the position to perform their "Lady Bountiful" act next year, which will be so vital if they are even to have a hope of winning the General Election. They will have to do this act again. I have noticed that Tories have always smiled when we make this reference, but if we study the pattern of every Budget since the Tory Party came to power in 1951, we find that they have followed exactly the same pattern every time, but they will do this trick once too often, because the people are now beginning to realise that this is what has been happening and still happens.

Mr. Ridsdale: Would not the hon. Gentleman agree that the fact that we

have a balanced Budget means that we are going to have a stable £ and that that enables the old people to purchase what they want with it?

Mr. Wilkins: It is laughable to hear that explanation from hon. Members opposite about a stable £ and so on, when I have a newspaper here, which was published the day after the Chancellor's last Budget speech, which called him "See-Saw Selwyn". I did not call the Chancellor that; I said he was "a political yo-yo," always running the economy up and down, and this is what we have seen happening all the way through.
I believe that we have reached the point of time when the Chancellor and his Treasury officials have been through the motions of Mohammed in going to the mountain and producing a mouse. It is a complete and utter waste of time, because there is practically no change. After all, I suppose that no one would have been very optimistic in imagining that there was to be any change in the Budget this time. Why could not the Chancellor have done it in a simple way, without juggling with the 10 per cent. surcharge, taking it off and putting it on to something else, making things exactly as they were before? Why could he not honestly have said that the time was not ripe for any alteration and that this was a standstill Budget? I suppose that it is too much to expect that that is the way it would be dealt with by the Government.
I conclude by saying that I do not believe in being destructively critical without giving my own opinion about things. I am myself in favour of direct taxation rather than indirect taxation. I always have been, but I realise that it would be extremely difficult to change things suddenly, but I think that the incidence of a discriminatory Purchase Tax is bound in the end to create more and more anomalies. As the Chancellor enters into new fields with this tax, the anomalies are likely to increase rather than decrease.
It does not only do that. It also discourages rather than encourages industry. I know that the Chancellor has had a violent reaction already from the footwear manufacturers, because they have sent me a copy of what they have said


to him. The incidence of the new tax on footwear means that a pair of shoes, children's or any other, will cost something like a shilling in the £ more. The complaint of the Footwear Manufacturers' Association is that this has come at the very moment when they are experiencing a recession in industry. They are extremely concerned, and they say:
If Purchase Tax on footwear is raised to 10 per cent. from today, it will be deeply resented by footwear manufacturers and distributors and we wish to protest most strongly against it.
How many more trade organisations have protested to the Chancellor? It would be interesting if we could know whether any other trade organisations are protesting against the incidence of the increase in tax.
To give a further quotation, the Association states to the Chancellor:
This tax increase, which will raise the retail prices of footwear by approximately 1s. in the £, can only have a further depressing effect on trade and your announcement, received on the opening day of the industry's annual exhibition of autumn shoes in Harrogate, has been a bitter blow.
I appeal to the Chancellor to have second thoughts about this.
It is necessary for the nation to have a Budget, in precisely the same way that we in our own domestic circumstances have to formulate our budgets of the expenditure which we have to make according to our income. I suggest, however, that in the case of the national Budget, when the Chancellor is deciding upon the amount of revenue he needs and how he will get it, his responsibility is to ensure that the amount of the burden that he is called upon to raise is fairly shared among all members of the community.
I ask the Financial Secretary to put it to his right hon. and learned Friend that it is grossly unfair still to persist with the £83 million relief to Surtax payers. Why does he not impose upon those people the same pause that he is imposing upon the nurses, whom he has treated most shabbily? How can he expect the people to accept from the Tories the sort of doctrine that it does not matter about giving money to their own wealthy pals but that there should be vastly different treatment for the

people who are doing some of the finest work and for whom I have the utmost admiration—and I have had cause during the last five months to see them, unfortunately, at very close quarters. The way we treat these girls in our hospitals is shocking and a disgrace to a country that calls itself great.

9.4 p.m.

Mr. Stan Awbery: Every speech that we have heard this evening has dealt with the wage pause. Those who have supported the wage pause have supported helping the wealthy on every occasion. I want to deal not only with the operation of the wage pause as instituted by the Chancellor of the Exchequer, but with the manner in which it was put into operation.
This action by the Treasury is direct action. If men strike for an increase in wages, that is direct action. If the Chancellor says that there is a pay pause and that wages can go thus far and no further, then that, too, is direct action. He has set an example to industrial workers to do exactly what he has done.
The right hon. and learned Gentleman may say that he has had nothing to do with it, but when the midwives and the nurses saw the Minister of Health this statement was issued:
The Minister explained the circumstances which had led up to the Government's policy on incomes. He emphasised that the management sides' recent offer of 2½ per cent. was made within the limitations which this policy in present circumstances imposed.
That means that there is no need for Whitley Councils or arbitration because the Minister himself is to determine what wages are to be paid.
I have spent most of my life in the trade union movement trying to build up machinery for negotiation between employers and employees. In the early days it was a fight because the employers were always against the workers, but at last we broke down that opposition and built negotiating machinery. Whitley Councils were set up during the First World War to keep the peace in industry. Now the Government have destroyed that machinery and, in effect, have told industrial workers that they can do what they like, because the Government will not allow the trade unions to dictate what wages shall be paid.
I received a letter from the midwives saying that the offer of 2½ per cent. had been rejected by the staff side as a totally unacceptable answer to their wages claim. There were no real negotiations on that claim. Are the Government to take that view that they will determine the wages to be paid in each industry, thus breaking down the present machinery? If so, why do they not tell us directly that that is their intention and that they leave it to the unions to exert industrial pressure and use the strike weapon? The Government have given an impetus to direct action in every industry.
I appeal to the Chancellor of the Exchequer not to impose a pay pause again. I understand that the wage pause has ended, but for how long? I hope that he will not compel the unions to use a weapon which they have tried to put aside, but will encourage the use of negotiating machinery with which all sensible employers are in agreement. He is preventing the industrial machine from functioning.
I come back to some of the points of the Budget. Most of the arguments have been raised on big economic problems. I have come to the conclusion that neither our statesmen nor our economists understand some of these problems, much less the remedies we try to employ. We heard today—and I believe this to be correct—that the prosperity of our nation depends on an increase in productivity. The people who produce wealth are not the shareholders, nor those on the Stock Exchange. The only people who can produce wealth are those in the factories, and these are the people whom we are now penalising.
I listened carefully to the speech of the Chancellor of the Exchequer. Budget day is the biggest political day in the year, the day when the Chancellor determines how he will raise the money to pay for the country's services. I remember that many years ago I listened to my father talking about the Budget. I remember when Sir William Harcourt introduced a Budget which placed a tax of 6d. on a barrel of beer. The Chancellor has now placed a tax of 6d. on 1 lb. of sweets; a tax of 15 per cent. on ice-cream for children. It may not be much, but it is a penalty on

children, and the last thing that the Chancellor should do is penalise the children.
Budget speeches in the past have been great ones, listened to by the world. A couple of minutes ago a Count was called because there were not a dozen Members in the Chamber. Although I respect the Chancellor, I profoundly disagreed with what he said in his speech. There was no sign of enthusiasm in this so-called great speech of the year. The silence was so deep that we could almost hear the Chancellor drinking his glass of water. There was nothing in his speech to lift the drooping hearts and spirits of his own side, or to boost the morale of the country.
There was nothing in his speech to stimulate courage to face the future; nothing in it to capture the imagination of the electorate. I suppose that he has postponed his imaginative Budget so that next year he can capture the imagination of the electorate, and hope to capture their votes at the election which may follow. We have been told that we have never had it better in our lives. In the circumstances, I expected the Chancellor to act like the Good Samaritan. What did he do? He acted the Levite. He passed by on the other side, met the children, and taxed their ice-cream.
There was a flood of words from the right hon. and learned Gentleman, but the whole of his speech was devoid of compassion for the old-age pensioners and for the lower-paid workers. It was as thin as the soup made by boiling a chicken that had been starved to death. No doubt he has kept something up his sleeve. We must wait for twelve months to see what he will bring out. If that is the game that he seeks to play next year I can tell him that he may be able to fool all of the people some of the time, and some of the people all the time, but that he cannot fool all the people all the time. Orpington should have taught him that lession. In my early days in politics people used to accuse one of our Ministers of Health of stealing the babies' milk, because he stopped the supply of milk to children in schools. Ultimately, children will ask, "Who taxed our ice-cream?"
In his speech the Chancellor did something to lift the cloud hanging over his


hon. Friends. One hon. Member opposite has declared his interest in the matter. Stockbrokers and shareholders were the only ones to put out the flag on Tuesday, and to welcome the Chancellor's speech. They were millions of pounds richer when he sat down than they had been when he stood up, because they had had the benefit of what he was doing. Those who gamble with our economic life are treated well. They expect it—and they have not been disappointed. Their party is in power and their party is looking after them. They got what they expected.
But the producers of wealth—those who make our country great—are forgotten. Those who labour the most will get the least, and those who labour the least will get the most. The Chancellor is making friends with Mammon and unrighteousness. How is he treating other people? The nurses have already been referred to. They, together with the teachers, civil servants and gas workers, who have all been groaning under the burden, are sent empty away. That is the sort of thing that angers me, as a trade union leader who has spent his life in the movement. I find it difficult to express myself.
I now want to deal with a matter that affects the intimate life of my constituents in Bristol. If those whom I represent were here tonight, they would say what I am going to say, and I am saying it because they cannot say it. That is why I have risen to speak. I know what they feel. They are hit the hardest, but are left out of the Chancellor's consideration. The Chancellor is committing an injustice by omitting to remove an injustice.
I now turn to the question of Schedule A tax. The Chancellor has said that he proposes to abolish the Schedule A tax. I asked Questions about this tax four years ago, but nothing was done. We have had a Conservative Government now for eleven years but for the whole of that period the tax has remained, although it has been recognised that it was unjust and should be removed. When a man purchases a house he is told, "You have bought your house. Now we shall penalise you. You must pay Income Tax according to its valuation." His next-door neighbour, who has not made sacrifices to become a

house-owner, does not have to pay this tax.
I say that that is unjust and unfair. Hon. Members opposite believe in a property-owning democracy but why should they tax the people who become property owners? The Chancellor has said that this tax is to go. I want him to tell us when he proposes to remove it. On Monday, the Chancellor said that the Government
… could not charge owner-occupiers of residential property with Schedule A Income Tax on the new rating valuation.
The right hon. and learned Gentleman will not remove the tax for altruistic reasons, but because he cannot measure the value of the tax according to the new valuation list. That indicates the unsatisfactory nature of the tax.
The right hon. and learned Gentleman continued:
… I intend that this matter shall be dealt with in 1963…we will not seek to use the new rating valuations for Schedule A purposes… we will make proposals for bringing this tax… to an end. I cannot say now whether this will be done in a single operation in one year.
So we cannot expect it to be done next year, because that would be a single operation.
It will mean giving up about £50 million a year."—[OFFICIAL REPORT. 9th April, 1962: Vol. 657, c. 978.]
The Chancellor is not prepared to give up £50 million a year. That means that the abolition of this tax will take a considerable time. He should not hide behind a multiude of words which will mean nothing to those who have to pay the tax.
We encourage men to buy their houses. In 1935, I was a member of a local authority and urged it to apply the Small Dwellings Acquisition Act so that men could borrow money cheaply through the local authority in order to buy their houses. Hon. Members opposite are lovers of owner-occupiers. They say that if a man owns his house he will always vote Tory. I am rather doubtful about that. I want them to consider the man who buys his house. He finds it very difficult to borrow the money. Since the Government have been in power interest rates have been increased several times. They went up to 7½ per cent. Although they are now coming down, buyers of houses have to pay increased charges.
I had a case of a man who paid £2,000 for a house. Although 1 per cent. sounds small, it amounted to 8s. a week for him. That is the encouragement these people are being given. Staggering figures were given on Monday about the total which has to be paid for a £2,000 house. At the end of forty years he would have paid over £6,000. By increasing the interest thousands of people are prevented from buying houses. Money given to local authorities for this purpose is severely restricted even if it is for homes for the people. There is money for everything except building houses.
After a man has bought his house he is up against another problem. Something which people in Bristol feel very strongly about is compulsory purchase. The Act was put into operation after a man in Bristol bought his house. I know of a case in which a man bought a house fifteen years ago, but now the local authority has made a compulsory purchase order and he will get £25 compensation for his house. It is to be pulled down and he will get £25, although it may cost him more to pay for the demolition. I ask the Minister to give consideration to this question because it is creating a lot of heartache in the City of Bristol, where compulsory purchase has been put into operation in order to make room for the building of new houses.
I have no objection to compulsory purchase when it is necessary for building houses, but when a man has a house taken from him he should get fair compensation. There have been cases where land has been purchased under a compulsory purchase order and property taken. Part of the property has been utilised by the local authority, but part of it has not been used. The part which has become unnecessary has then been sold without consultation with the man who lost his property. If such a house is to be sold the owner should be consulted and given the first opportunity of buying it back again. I ask the Minister to give consideration to these problems.

9.35 p.m.

Mr. David Price: The hon. Member for Bristol, South (Mr. Awbery) will not expect me to follow him too closely into his criticism of the Schedule A tax. I think all the Committee gathered that he did not like Schedule A

and will support any Chancellor who, in introducing the Finance Bill, seeks to abolish it.
I am sorry that the hon. Member for Wrexham (Mr. Idwal Jones) has not been able to take part in the debate, because I looked forward to following him. I am sure that he realises that I have a curious connection with him in his constituency in that the founder of my old University of Yale lies buried in the churchyard of Wrexham, where, I suspect, the hon. Member's speech on the 1962 Budget will be interred.

Mr. J. Idwal Jones: The founder of Yale University actually lived within about 600 yards of my home.

Mr. Price: We see the connections that come out even in such dreary debates as on the Budget.
We live in an age of managed economies. We recognise this fact on both sides of the Committee. There is little agreement across the Floor of the Committee as to precisely how far and by what means the economy should be managed. Indeed, having listened to debates on economy for a number of years, I suspect that there is as much disagreement between hon. Members on each side as there is between some of us across the Committee.
Nevertheless, I think that there must be few hon. Members who disagree that the economy must be managed, at least in some degree, and that therefore by implication the economy must be planned with all the attendent risks of excessive State control. We are all planners now, though some planners would have us plan more than other planners.
I understand that the right hon. Member for Orkney and Shetland (Mr. Grimond) especially believes that planning can be carried out safely only by Liberals. It was with great interest that I read his address to the Liberal Party Conference last autumn, in Edinburgh, in which the right hon. Gentleman used these words:
The danger of planning is that it forgets that all planning is for people. In their enthusiasm the planners are apt to think people exist for the plan "—
I would say "hear, hear" to those eminently wise and sound words. He


goes on with the proposition, which I find it difficult to follow:
The great protection against this attitude is to have planning by Liberals ".—
[Laughter.] This is to be taken seriously—
For, whatever Liberals may be, they are first and foremost concerned with individual men and women.
I find this belief that Liberals are the only people who really care about ordinary men and women really rather arrogant and, I would have thought, mildly patronising. I am afraid that my image of the Liberal planners is both matriarchal and patrician. The right hon. Gentleman is to me a man of infinite charm, whose membership of this House of Commons is a pleasure to us all, but let us in this Committee and the electorate outside heed the wise advice of Mr. Stephen Leacock:
Many a man in love with a dimple makes the mistake of marrying the whole girl.
We must be careful. Furthermore, we should also agree that one of the main instruments for managing the economy in Britain is the Budget. That sounds very obvious and rather platitudinous, but I do not think that it is obvious to everyone outside the House of Commons. Having listened to some of the speeches during the debate, I do not think it is obvious to everyone in this Committee. There still seem to be many people who regard the Budget simply as an exercise in Government accounting, whereby taxes have to be raised to pay for Government expenditure. Indeed, I go further. There are many people who regard the Budget as a form of annual prize-giving. If they do not receive a prize the Chancellor is regarded as unenlightened, reactionary and utterly deliquent of the national interest. If he increases a tax—as, I think, from time to time he should—it is mean and disgusting.
One is reminded of Alice in Wonderland. The Committee will recall that after the race the Dodo declared,
Everybody has won, and all must have prizes.
It seems to me that the speeches of some hon. Members opposite could have been made more briefly by the Dodo—
Everybody has won and all must have prizes.

That has been the content of some of the speeches that we have listened to over the last few days. Until we rid ourselves of the idea that in every Budget everybody must have a prize, we shall never be able to use the Budget, as it should be used, as an acceptable instrument for managing the economy.
If I carry the Committee with me that the Budget is a proper instrument for managing the economy, we must declare what our economic aims are at present. In my view, our immediate aims this year are these. The first is to make the economy more competitive at home and abroad. The second is to increase our exports to markets where we get paid. I emphasise the part about getting paid, because anyone can increase his exports to people who do not pay. People are apt to be concerned purely with the volume of our exports. It is the "lolly" I want for this country. Our third aim is to prevent incomes arising ahead of national productivity.
If we pursue these aims with determination and justice this year, I believe that we can achieve as our long-term aim a proper rate of growth and sustain it. For the benefit of hon. Members opposite who may want to know what my idea of a proper rate of growth is, I believe—here I go one better than O.E.C.D.—that it should be 5 per cent. per year compound.
What are the means of achieving these aims? By means of the Budget we must try to equate the projected demand upon our resources against the projected supply. If we allow demand to run ahead of supply, we have no hope of achieving our aims, because we will run straight into a balance of payments crisis. However, I do not believe, though some people do, that it is sufficient merely to attempt to restrict home demand. More positive policies are necessary. A good start has been made by my right hon. and learned Friend in the direction of more positive policies by virtue of the creation National Economic Development Council, the five-year forward look at Government expenditure, the improvement in the services of the Board of Trade to exporters, the start, somewhat painfully, of a national incomes policy, and a more dynamic approach to Government support for science and technology, especially by my right hon.


Friend the Minister of Aviation in the field of co-operative space ventures.
But more has yet to be done. When I addressed the House last December, I picked out twelve points in the economy where I thought action was necessary. I shall not repeat those twelve points tonight I wish only to observe that I regard them as just as important tonight as I did last December. Indeed, I hope that the Committee will accept my contributions to our economic discussions in serial form, as I do not want to bore the Committee by repeating myself.
I wish to limit myself tonight specially to this year's Budget. The main question we have to decide during these debates is whether my right hon. and learned Friend has given the right shape to his Budget. Has he taken the correct budgetary view of supply and demand? He has budgeted, as the Committee will recall, for a net deficit of £74 million, which he will have to borrow. There is a school of thought which will say that he has been too generous and that he should have budgeted for a net surplus. I cannot subscribe to that point of view.
I want to comment on what I call the deflationary school of thought. It believes that income-induced inflation—the cost-push inflation—can be controlled by reducing total demand. This point of view was very clearly dealt with in the current number of Lloyds Bank Review in a very penetrating article by Mr. Clegg, who said this:
… it is wages and salaries before tax which constitute costs, so that a reduction of incomes through the Budget is not an appropriate method of attacking this 'cost-push' inflation.
Like Mr. Clegg, I believe that the deflationary school has made a wrong analysis of the causes of cost-push inflation. Both the United States and Denmark have experienced rising prices with unemployment levels far higher than ours.
Some people hold the view that the pull of the home market diverts production from exports. If there is an excess of demand at home, it does that. However, I do not believe that the reverse is true and that simply by restricting home demand people are forced into the export market. In theory that happens, but, as hon. Members have pointed out,

we are human beings and not economic men. I believe that those of us who have practised the craft of economics academically have a certain responsibility for getting the public to believe in this rather mythical creature the economic man, who exists only on graphs and in theory and who one has never met in practice.
The other point of view that has been advanced from the other side of the Committee is that the Chancellor has been too cautious; that he should have budgeted for a large overall deficit. I must admit a slight sympathy with that view because, as the Committee knows, I am a committed and unrepentant expansionist, but the simple view that cost-push inflation can be corrected simply by increasing home demand, and thereby increasing consumption, is fraught with danger, and only too often recently an increase in home demand and in production has led straight to a balance-of-payments crisis.
I would here again quote from Mr. Clegg's admirable article. He says:
…incomes have not risen steadily from year to year. Generally they have increased faster during the years when output has grown most rapidly. Labour has been short, overtime has crept up, unions have been encouraged to set their claims high and employers have had more to lose by standing firm. Expansion, therefore, adds to the rate of growth of incomes. There may be some-rate of economic growth that would absorb the wage increases likely to be associated with it, but it is not possible to reach equilibrium at the average rate of wage increase in recent years.
The author goes on to other arguments with which I shall not trouble the Committee.
There is, of course, a short-term remedy to balance-of-payments crises due to excessive home demand, and that is either devaluation or import controls, but I am sure that all hon. Members will agree that those are, at best, short-term policies, and do not, in themselves, remedy a secular trend towards cost inflation.
If my right hon. and learned Friend has been too cautious then, as the Committee knows, he has many remedies outside the Budget. He can alter the Bank Rate and credit policy. He can realise Special Deposits and use his surcharge regulatory as a minus element instead of a plus element. He can pay out more


post-war credits and increase social benefits. There is also the r61e of Government orders and purchases.
That being so, I think that my right hon. and learned Friend has the overall balance of his Budget about right. It is difficult, however, to be precise. Let us remember that if we take the total volume of the Budget—both sides, above and below the line—we are dealing with about £16,000 million. If the Chancellor is 1 per cent. too cautious it might mean his having to raise Income Tax by 6d., or, if he is too optimistic by 1 per cent., he must lower it by 6d. in the £.
As a taxpayer, I realise the personal implications of these modest margins. If the Chancellor is 1 per cent. too cautious in his budgeting, I may find myself in for a hideous personal balance of payments problem with my bank manager. That is the personal implication to all of us of my right hon. and learned Friend's sincerity of purpose. It may incline us to agree with Oscar Wilde, that
… a little sincerity is a dangerous thing and a great deal of it is absolutely fatal.
Does that mean that I am satisfied with the Budget as it stands? I am not. I believe that the case for major structural reform in our taxation system is overwhelming. I know that my right hon. and learned Friend is full of good intentions. In his Budget speech, he said:
I have tried to maintain some momentum behind the reform of our tax system…"—[OFFICIAL REPORT, 9th April, 1962; Vol. 657. c. 993.]
If my right hon. and learned Friend's actions in tax reform had momentum behind them, it is truly the momentum of the tortoise; no doubt a well intentioned tortoise, but the road to hell and Orpington is paved with good intentions—even the good intentions of tortoises.
I should like now to suggest some of the major direct tax changes that I should to see. I should like to see the abolition of the concept of standard rate of Income Tax. I should like to see Income Tax and Surtax amalgamated into a single graduated Income Tax. That, for me, would involve removing the flat point in the progressive curve that will arise under the Chancellor's new Surtax arrangements between £2,000 and £5,000. I want to see a fairly smooth curve right the way through personal incomes.
I would like to see the abolition of the distinction between earned and investment income. In an age of high consumption, the wages of forbearance to spend should not be penalised. Everyone agrees with the need for a high level of investment, but surely, in the circumstances, those who save should not be treated any worse than those who spend.
As one who lives close to his overdraft all the time, I have a very high regard for those who save, and I do not see why those who save should be penalised. If this were done—and only if it were done—I would accept a full-blooded capital gains tax. This would, logically, follow. I would also like to see a corporation tax, amalgamating the current standard rate and the current profits tax. This would involve a 26 per cent. rate on taxable profits. While appreciating the facts, why have no previous Chancellors of the Exchequer thought about this form of taxation? It would, of course, involve the introduction of a withholding rate and the abolition of the concept of years of assessment in favour of years of income.
My right hon. and learned Friend should also consider—and I suggested this last year—the introduction of a new capital tax. I would like to see a once-and-for-all capital charge on the enhanced value of land where the value of that land has been changed as a direct consequence of a change in planning permission. This would be fair. The community rations land through planning and where the value of land is greatly enhanced, through no action on the part of the owner of it, surely the community is entitled to take some of it back?
My hon. Friend the Member for Halifax (Mr. Maurice Macmillan) suggested the abolition of Stamp Duty. This is merely because it is a technical obstacle to the greater earning powers of the City of London in the trading of the world. I have mentioned one condition under which I would accept a full-blooded capital gains tax and I now give a second reason. I would like to see the total abolition of Estate Duty in return for a full-blooded capital gains tax.
It appears a little unseemly that we should impose our main capital tax on


the dead and not on the living. I have a curious preference for taxing the living and not the dead, although I appreciate that the present pattern may have a political significance since the dead do not have the vote. As a Tory, I have a respect for tradition, but tradition is merely extending the suffrage from one or two generations previous to one's own.
My major proposal is that I would like to see a payroll tax introduced which would be a revenue raiser. This would please my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan). I did not like the Chancellor's proposal last year for a surcharge on employers' National Insurance contributions. It was a poor attempt to institute a right tax for the wrong reasons by the wrong methods. I want to see a payroll tax instituted as a major source of revenue to pay for a large part of our social services.
I take the German pay-roll system as a model and I translate current German practice into British terms, based on our 1961–62 expenditure. I take the German practice because, as a humble back bencher. Treasury information is not available to me. First, I would abolish the insurance principle. Social payments should be made a direct charge on current revenue. I realise that this is very revolutionary and, thus, Liberal hon. Members will realise that radicalism is not limited to their ranks.
Secondly, the cost of current social payments, excluding education, should be divided among employers, employees and the Exchequer in the following proportions: employers, 44 per cent.—today they pay only 23 per cent.—employees, 33 per cent.—as against 27 per cent. which they pay today—and the Exchequer 23 per cent.—as against 50 per cent. today.
The tax would be levied as a direct percentage charge on the total earnings of each employee. Government Departments and the Services would pay the same as everyone else. The whole range would be covered; National Health Service, industrial injuries, family allowances, retirement pensions, unemployment benefit, and widows, but not including education.
On current figures this would mean an employer's contribution of 7½ per cent. of each employee's earnings and an employee's contribution of 5½ per cent. of total earnings. In terms of a £15 a week employee, this would mean an employer's contribution of 22s. 6d. as against 8s. 7d. today and an employee's contribution of 16s. 5d. as against 10s. 7d. Now comes the Committee's reward for listening to me so patiently. This would make available nearly £650 million for the reduction of current taxes. What a field day is open to us…
I will tell the Committee very briefly how I would distribute that. First—this will appeal to right hon. Gentlemen opposite—I would raise and extend the lower bands of Income Tax. I would raise from £60 to £100 the lowest band at present charged at 1s. 9d., which would cost £150 million. I would raise from £150 to £200 the second band, at present charged at 6s. 3d. That would cost another £100 million. I would raise from £150 to £200, the third band at present charged at 6s. 3d. That would mean that from the starting point any taxpayer would have £500 before he reached the standard rate. Alternatively, one could reduce the standard rate and all lower rates equivalency all through the range to the tune of 9d. in the £, making the standard rate 7s., or one could raise the starting point. There are many prizes available there. There is, of course, in these proposals an element of redistribution to the lower-paid employees and, above all, to retired people on fixed incomes.
As to the employers' benefits, I would reduce from 26 per cent. to 20 per cent. the corporation tax. I would abolish the 2d. per gallon duty on heavy hydrocarbon oil imposed last year, or I might reduce the duty on light hydrocarbon oil from 2s. 9d. per gallon to 2s. 5d. Furthermore, I would rationalise Purchase Tax into two rates, one at 10 per cent., raising those at 5 per cent. as my right hon. and learned Friend has done, and lowering those at 12½ per cent., and one at 25 per cent., bringing all the higher rates down.
These are some of the opportunities that would be open to us. I will not be dogmatic about them, but I wanted to give the Committee an idea of what I might do. In doing this I would be transferring the burden of taxation on


to employment and thereby broadening the tax base where it could be borne most productively. The long-term effect would be to encourage more efficient use of this country's major raw material, the brains and skill of our people. It is my opinion, based on some modest industrial experience, that as a nation we grossly under-employ our people. The hon. Member for Ashton-under-Lyne (Mr. Rhodes) spoke on the same theme earlier. I am not suggesting that the majority of people do not work hard or conscientiously, but rather that, due to inadequate planning of work and the misdirection of work, a great deal of human effort is wasted.
I have not time to speak of the many more advantages of these changes, but no doubt at some other time I shall be able to pursue the subject. I merely conclude by saying that I hope that my right hon. and learned Friend the Chancellor of the Exchequer and his colleagues on the Treasury Bench will take my proposals seriously. I realise that my right hon. and learned Friend has to be cautious and take as few risks as possible. None the less, I should like him to be a little more daring in his approach to tax reform. I know that he has it in his heart to be the people's champion against the hydra of our taxation system, protected as it is with the armour of precedent and defended by the sword of administrative convenience. My right hon. and learned Friend is a man of rectitude, but, you know, Sir William.
They say best men are moulded out of faults;
And, for the most, become much more the better
For being a little bad.

Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again.—[Mr. Whitelaw]—put and agreed to.

Committee report Progress; to sit again Tomorrow.

SUNDAY CINEMATOGRAPH ENTERTAINMENTS

Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the Urban District of Aberdare [copy laid before the House, 4th April], approved.—[Mr. Renton.]

INCIDENTS, TRAFALGAR SQUARE (CONDUCT OF THE POLICE)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Whitelaw.]

10.0 p.m.

Mrs. Joyce Butler: It is now nearly seven months since the incidents in Trafalgar Square which the Commissioner of Police was asked to investigate and I had hoped that it would not have been necessary at this late date to make reference to those events again. Nevertheless, the report of the Commissioner which was submitted to the House in a statement made by the Home Secretary on 1st March was of such a nature that I have felt it necessary to ask for this Adjournment debate tonight and also to recapitulate briefly the main points which the Commissioner was asked by members of the public who were concerned at the events in Trafalgar Square to investigate.
In a debate on the Adjournment on 17th October last my hon. Friend the Member for Rossendale (Mr. Greenwood) mentioned a number of incidents involving violence on members of the public who were in Trafalgar Square at that time. He mentioned them by name and he gave full particulars of several very serious cases. At the conclusion of the debate he asked for an independent inquiry into these incidents.
On 19th of October, in another place, Lord Kilbracken gave additional evidence of incidents which should be investigated. He mentioned that after midnight in the square a large force of constables fell upon the few hundred remaining demonstrators and that they acted in a collective organised way and, therefore, obviously with orders from above. Constables would grab hold of demonstrators by an arm or leg, or by the scruff of the neck, and drag them at the double the full length of the square.
The noble Lord went on to draw attention to one very serious aspect of the matter. That was that, after midnight, of the six Members of Parliament who had gone as observers five had gone home and only the hon. Member for Eton and Slough (Mr. Brockway) was


left and he was arrested at 12.15. One reporter was arrested while taking notes in the square, two B.B.C. cameramen and a Granada cameraman were arrested in the square, another reporter was threatened with arrest unless he left the square, and a third who requested re-admission was violently told to leave. A fourth was pulled from a telephone box as he was phoning copy to his newspaper and told to leave the area and not come back. A crew from the I.T.A. stated that they had full co-operation from the police until 12.25, but were then told by the police that they could use no lights and were later escorted from the square.
I reiterate these points because these were incidents which were mentioned in the House and in another place which anybody who was concerned about the behaviour of the police and the rights of the public would expect an investigation to examine and report upon. The National Council for Civil Liberties published a very full account of other incidents and gave eye-witness accounts of them. One in particular refers to a Mr. Adam Roberts. The Council's report said that
The police deliberately hurled him to the ground so that his head struck the floor with an eggshell sound.
That was a statement by the Mayor of Greenwich, who saw the incident.
The report goes on:
About five policemen came in dragging him with their hands and kicking him with their knees and feet.
These incidents led a number of Members of this House to ask the Home Secretary again on 9th November if he would hold a full public inquiry. He said that he could not do that, that he was awaiting the Report of the Commissioner of Police. On 1st March the Home Secretary made a statement about the report of the Commissioner which he had then received. The statement he made to the House was a very brief one, and I should like to quote the main part of what he said. It was that the Commissioner had investigated each of the 54 specific complaints made, and that he had concluded that
the great majority of the police officers concerned acted properly and indeed, in very difficult circumstances, with commendable restraint. But towards the end of this long operation there appear to have been a few

cases, during the clearance of the Square and afterwards, in which some officers fell short of this standard. In particular, it appears that four or, possibly, five individuals were put in the fountain basins. This was, of course, most improper. Unfortunately, the complainants were unable to identify any officers concerned and most searching inquiries have failed to do so. A police sergeant has been admonished for allowing a hose to be turned on in the yard at Bow Street when some demonstrators were there, although it was not directed at them. A woman police sergeant has also been admonished for a remark to which objection could properly be taken.
That was practically all that the Home Secretary said about the Commissioner's report, although he did add:
Police records show that only six members of the public asked for medical attention because of injury and I am glad to say that all the injuries were slight and no one was admitted to hospital."—[OFFICIAL REPORT, 1st March, 1962; Vol. 654, c. 1537–8.]
This seems to me to be a most inadequate answer to the very serious charges which have been made. It is all the more inadequate in that the Home Secretary refused, when I asked him by means of a Question, to publish any kind of précis of the Commissioner's report. He also refused, in answer to a Question from my hon. Friend the Member for Salford, East (Mr. Frank Allaun), to publish the particular part of the report dealing with the more serious allegations.
Therefore, we are left with this great difficulty, that charges have been made, the Commissioner of Police has made a report to the Home Secretary which is regarded as inadequate, and the only information we have about that report is the very brief statement which the Home Secretary made to the House on 1st March. There has been no comment made on the very serious case of Mr. Adam Roberts. There has been no adequate comment made on the people who were dragged across the square, which quite a number of observers have reported upon.
There has been no adequate comment on the removal of the reporters after midnight, and it is significant that the cases against all of them were subsequently withdrawn. There has been no light thrown on the precise orders which were given to the police after midnight in clearing the square. In fact, no


one accepts responsibility for the incidents which occurred and which have been substantiated by witnesses.
I had hoped that when the Commissioner's report was submitted to the Royal Commission on the Police the Royal Commission would be publishing that report, as it does the other evidence submitted to it, but according to the Home Secretary it will not be publishing the Commissioner's report, and, once again, because it is confidential. It seems clear that although the report has gone to the Royal Commission the Royal Commission will not be able to deal in detail with any of these points to which I have been drawing attention, and that it will not be able to do so simply because the report itself is confidential; and it cannot, obviously, comment in detail on a report no part of which can it publish.
This ties up with the previous comments which have been made that it is a most unsatisfactory way of dealing with this type of complaint for police officers to be investigating complaints against other police officers. It is true that the police officers investigating the complaints were not concerned in the incidents, but, nevertheless, it is a most unsatisfactory way of conducting an inquiry.
Clearly, the incidents to which I have referred have two interpretations-the interpretation of the people concerned and the independent witnesses whom they produced, and the police interpretation—and no member of the public can be satisfied which is the correct interpretation unless there is some machinery for calling witnesses and cross-examining them and the police and the people who make the allegations. That is the only way in which the truth can be established and a satisfactory outcome ensured.
I would say, in passing, that the test which the Home Secretary seemed to apply of cases needing medical attention, and the fact that none of the people needed hospital treatment, is not a very fair one, because, as was pointed out in another place, it is possible to drag people face downwards across the ground and to bruise and lacerate them, without necessarily causing them to need hospital

treatment. It is no answer to say, or to imply, that violence has not been used because people did not go into hospital. They could be injured without needing hospital treatment.
It is extremely difficult for people to take these cases to court themselves. The expense involved is very considerable, and there is the great difficulty of establishing identity. It has been pointed out in the House that the present methods of expressing grievances against the police are extremely unsatisfactory, and that is one of the reasons why the Royal Commission on the Police is sitting at present.
Some of the people who have made complaints to the Commissioner of Police have received letters from him since they made their complaints, and have been told that he was unable to identify the officers who might have been concerned in the incidents which they described. Others have been told that where they gave the numbers of particular police officers who, it was said, were concerned in the incidents, those officers were not in that place at that time, or that the complaint could not be checked. This is my opinion, is most unsatisfactory.
There is one further point I wish to make regarding the Royal Commission on the Police, and that is that when the Home Secretary spoke on this point on 1st March he made it quite clear that the Royal Commission is reporting on the general issue; namely, how future complaints should be handled. That disposes of any suggestion that the Royal Commission will go more deeply into these particular incidents than the Commissioner of Police has already done. Therefore, I ask the hon. and learned Gentleman if he will ask the Home Secretary to publish the report of the Commissioner of Police, so that we can all examine it, or, at any rate, a very full précis of it. There is precedent for publishing a précis of a confidential report, where there is difficulty in publishing a full report.
If the Home Secretary will not publish it, I think that the case for a full independent tribunal is quite clearly established. The hon. and learned Gentleman will know that we have been pressing for an independent inquiry all the way through. We reluctantly accepted an investigation by the Commissioner of Police, hoping that that, at


any rate, would clear the air and establish the facts. It has not done so, and, therefore, the case for a full and independent inquiry remains quite convincing, even at this late date.
The object would not be to cover old ground, but to establish the facts, so that justice is seen to be done and the public are satisfied that a proper independent inquiry has been conducted, which is of the greatest importance to all the members of the public and not just to the individuals concerned with what happened on 17th September.

10.15 p.m.

The Minister of State, Home Office (Mr. David Renton): The hon. Lady the Member for Wood Green (Mrs. Butler) has raised a number of points connected with the report of the Commissioner of Police on police conduct on the occasion of the demonstration organised by the Committee of 100 in Trafalgar Square on 17th and 18th September last. It may be helpful if I start by reminding the House of the circumstances in which the report came to be made. I am glad to see the hon. Member for Rossendale (Mr. Greenwood) with us this evening, because we appreciate the interest that he has shown in this matter.
In the Adjournment debate in answer to the hon. Member on 17th October, I referred to the statutory procedure for dealing with complaints against the police. Such complaints are dealt with under the police discipline code. Every complaint has to be thoroughly investigated, and if it turns out that there is a prima facie case for thinking that any provision in the police discipline code may have been infringed, a charge is then formulated and there is then a hearing under the statutory procedure.
I went on to explain on that occasion that the Commissioner, and not the Home Secretary, is the disciplinary authority although there is a right of appeal to the Home Secretary in more serious cases. I also explained that action had been, or was being, taken under the established procedure.
Later, in reply to a supplementary question by the Leader of the Opposition on 9th November, my right hon. Friend the Home Secretary said that he was prepared to see that the experience of the handling of complaints against the police

on that occasion should be put before the Royal Commission on the Police, which had already been sitting for a great many months. It was appropriate to put this matter to the Commission because it fell within its terms of reference. As the hon. Lady has said, that was done.
A copy of the Commissioner's report was sent to the Royal Commission for confidential information so that it could have before it this very full account of the way in which the statutory procedure operated. It is that procedure which, among other things, the Commission has to consider. It has the advantage of this recent example of the way in which the procedure works.
The Commissioner's report was based on inquiries made into detailed complaints against individual officers. Since the object of the inquiries was to establish whether there were grounds for taking action against any member of the Metropolitan Police under the statutory provisions governing police discipline, they were necessarily confidential. As the hon. Lady has already been informed by my right hon. Friend, it is not intended to publish the Commissioner's report. It is a well-established principle that inquiries by the police for seeing whether disciplinary action should be taken should be of a confidential character. There can be no question of publishing the detailed record in this case.
In his statement on 1st March, my right hon. Friend the Home Secretary outlined the conclusions that had been reached as a result of what I have described as a most thorough investigation. I remind the House that in the course of looking into no less than 54 specific complaints, statements were taken from over 400 police officers—that is a very large number—and from about 50 private persons. They were in addition to those from the complainants who also numbered just over 50.
The broad conclusion reached—and, incidentally, it corresponds with the broad conclusion reached by the hon. Member for Rossendale when these events were still fresh in people's minds—was that while the great majority of police officers concerned had acted properly and with commendable restraint, there were a few cases during


the clearance of the square and afterwards in which some officers fell short of this standard.
The hon. Lady has suggested that a confidential report of this kind is inadequate to allay public disquiet about the conduct of certain police officers on that occasion. She says that since the report cannot be published, there ought to be a public inquiry. I remind the hon. Lady that the adequacy of the existing procedure for the handling of complaints is the very question which is before the Royal Commission. By the way, the Commission's Report may be expected in the near future. Its terms of reference cover:
the relationship of the police with the public and the means of ensuring that complaints by the public against the police are effectively dealt with …
As my right hon. Friend has already said, we can only await the Commission's final Report.
As to the occasion which we are discussing this evening; no inquiries could have been more thorough than those made by the investigating officers appointed by the Commissioner to carry out this inquiry. There is no doubt that the senior officers concerned, who had the good name of the force much at heart, have been as determined as anyone to try to bring to light any breach of discipline.
It has been suggested that the inquiries have not been conclusive because in many cases it has not been possible to identify the officers concerned. As my right hon. Friend said in his statement of 1st March, it is true that the complainants were unable to identify any officers concerned in some of these incidents, in particular, the putting of several demonstrators into the fountain basins in the square. We should bear in mind that when there is a melee at night, with a vast crowd of members of the public—there were still a thousand demonstrators in the square after midnight and some hundreds of policemen were concerned—it is an inescapable difficulty if the police cannot be identified even by their number. That is a difficulty which would face a public inquiry just as it faced the officers holding the Commissioner's inquiry. It is a difficulty which would have faced the

Royal Commission if it had felt it necessary to go into this matter all over again and to adjudicate, which it is not its duty to do. I agree that it is also a difficulty which arises with proceedings in the ordinary courts.
The hon. Lady says that we need machinery for calling witnesses, cross-examining, adjudicating and so on. We have that machinery in our courts with their great tradition for justice, but unless the people concerned can be identified, they cannot even be brought before the courts.
It is also true that other inquiries would have been facilitated had better particulars of the officers said to have been concerned been available. But it would be quite wrong from that to draw the conclusion that the Commissioner's inquiries showed large-scale misbehaviour by officers who could not be identified.
Had the police behaved as some complainants have suggested, kicking demonstrators on the ground and dragging others for long distances across the square, serious injuries must have resulted; not in every case, but in some cases surely. But—and the hon. Lady has been very candid in drawing attention to the matter by quoting what my right hon. Friend said—the police records show that only six members of the public asked for medical attention on account of injury and in all those cases the injuries were only slight.
The hon. Lady has questioned not only the behaviour of individual officers but the manner in which the square was cleared after midnight. This question of how the square should be cleared after midnight was the result of a decision taken on the spot by those in charge of the operations. It was decided, when half the demonstrators had left and an opportunity had been given to all of them to leave, if they wished to do so, that the indefinite occupation of the square contrary to the direction that had been given should not be permitted, and it was on the basis of this decision that the square was cleared.
I am assured by the Commissioner—and this must be apparent to those who know the vast experience of the officers concerned in dealing with demonstrations of various kinds—that there was


no question of any encouragement by senior officers of the use of unnecessary force. It may well be that some sorely tried constables, who had been on duty continuously, some of them for about 12 hours, and I think all of them for 9 to 10 hours, and who thought that they could see the end of this protracted operation in sight, were pretty impatient when bustling loiterers off the square or in arresting those who refused to move. But the Commissioner is satisfied that there is no evidence that the action taken justified, by any reasonable standards, accusations of brutality.
Particular reference has been made to the case of Mr. Adam Roberts, and it might interest the hon. Lady to know that the statements of no less than 50 people were considered in relation to him alone. His case was gone into in the greatest possible detail. His own statements were carefully considered. The Commissioner had ample evidence before him to show that the allegations made by Mr. Roberts of brutality both in the square and at Bow Street Station afterwards were greatly exaggerated, and, what is more, they were not borne out by the medical evidence.
Mr. Roberts has been informed that in reaching the conclusion indicated in my right hon. Friend's statement in the House on 1st March account was taken of the full investigation made into his complaints. In my right hon. Friend's view, there are no grounds for departing from the general rule and making the report available to Mr. Roberts, as I understand he has asked.
May I go back to the generalities of this matter; to the more general issues raised by the hon. Lady. My right hon. Friend is satisfied that the present statutory procedure for investigating complaints against members of the Metropolitan Police has been followed with the greatest possible thoroughness in this case, and that there are no grounds for any further inquiry. It is, of course, open to any complainant in any case in which the identity of the officer concerned has been established—and there must be some such cases if the complaints are genuine in this matter—to consider the possibility of action in the courts, but that is a matter for them to decide.
On the general question of the procedure to be followed in handling these incidents, my right hon. Friend accepted without hesitation the suggestion that a detailed account of the way in which these complainants had been handled should be placed before the Royal Commission, and I suggest to the House that before attempting to draw any conclusions about the adequacy, or suitability, or fairness or otherwise of the present system we should wait and see what the Royal Commission has to say. After all, the Royal Commission has an opportunity of considering the procedure in relation to this particular matter.

The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Ten o'clock.